Sellers agent is charging the BUYER a 1% fee to negotiate the short sale...heres the language:

 

"Processor is negotiating a short sale, or discounted mortgage payoff, on behalf of the Seller and
Buyer of the Property. Processor, Seller, and Buyer agree and acknowledge that this sale is to be
conducted by including a Buyer Discount Fee of 1%(one percent) of the sale price but no less than a $2,500.00 minimum, to be paid to Processor ("Buyer Discount Fee"). The Buyer Discount Fee shall be paid by the Buyer to the Processor as an additional settlement charge to be included on the HUD-1 Settlement Statement and will be paid at the time of closing."

 

and the sellers agent won't even present the offer to the seller unless the buyer agrees to sign this addendum...1) is this legal and 2) are any of you doing this and 3) has it been done to any of your buyers?


 Thanks

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This might seem like a small point, but before it was mentioned that the listing agent was married to the negotiator. In my state, Illinois, that would mean the listing agent had a financial interest in using this negotiator. Here that would require disclosure to all parties, and certainly not requiring a particular vendor. The agent would definitely be breaching fiduciary duties by refusing to present an offer. I'd go to the agent's broker.
I'm in Illinois as well, and come up against this question frequently. Admittedly, I'm biased, but my opinion is that the Seller should retain and control the person negotiating on their behalf. This is difficult if you are not paying them. Further, this is a wholly unregulated activity. There is no fiduciary duty between the negotiator to anyone (except as arises from their "rider", and you can imagine how little that covers...) and if the negotiator sells the seller down the river, the seller has zero recourse. At least if the negotiator is your realtor or attorney you have some recourse should they do something dodgy (and, not coincidentally, there are few complaints arising from the performance of otherwise licensed professionals).

Recently I partnered with a start-up firm out of Houston, TX to help them with "Probate Short Sales", I'm in the DFW area. I understand that they also have agents on the ground in Tyler, San Antonio and Austin. The Administrator of the Estate has also employed the services of 3rd Party Negotiator on the buyer's behalf. Strange?... I know, but in the end they are the ones trying to get the contract offer "approved" for the buyer, not the seller. Sure the seller also benefits from the sale. We use a "Highest & Best" bid form, whereas the buyers are aware of the fee and are advised to calculate fees into their offer.

For the record, I was opposed using a 3rd Party Negotiator, but strangely enough it's working ok for now. However, I still  think I would like to have control of the negotiations.

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