Hi
We are a buyer and we found out sellers listing agent outsourced the negotiation to a third party. What's the typical fee these third party negotiators charge?

Thanks in advance

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Yes, I'm familiar with the OFR's position. However, it is in conflict with the Florida Bar's position that this representation is done in anticipation of litigation and in full representation as provided by the Constituion.

Lawyer owned firms are not exempt. The lawyer must provide full representation of the Seller, not just transactional representation or they will run afoul of the OFR and the Bar.

Title companies are allowed to process short sales in the course of their ordinary services. They cannot charge a separate fee or increase their nomal closing fee because of the claimed added work to process the short sale approval.

Good to know about the attorney situation. 

I still have to disagree with you on the title company though. There were many title companies here in Central Florida that did short sale processing, 2 that I trained myself. And when the rule/law changed they All stopped. 

Last year I went through the process of buying into and starting a new title company with the intent of doing short sales. I was shot down with both options by licensing boards because of the short sale issue. 

There are still title companies doing short sales and have just raised there title fee from $600 to some over $2000. and there are many Realtor that have filed complaints against them. This has come up at ORRA many times and we're just told to keep reporting the offenders.

Don't get me wrong; I agree that neither a title company nor a Realtor should be processing short sales. Too much liability in so many areas. The Florida Attorney General issued an opinion letter that provided no fees were being charged and the processing was only being done in the course of their normal activities a title company may process....foolish as it is. The Sellers just don't understand. I'm now experiencing customers that are now being sued by junior lien holders on short sales from 2 and 3 years ago.

Those companies charging those fees will most likely find themselves behind the 8 ball down the road..it always happens that way.
What may be preventing the title companies from processing short sales is their underwriters have ordered them to stop because of the liability. That I am aware is now occurring with some insurers.

The buyer should not have to pay an added fee for a short sale.  If the listing agent can't process a short sale on their own then they shouldn't take the listing.  I know plenty of agents who won't even show a listing that has a negotiation fee.  When I disclose to a client that the listing agent is charging an extra $500 to $2,500 fee, most of them don't want to bother with the property and we move on to another listing.  

I dealt with one agent who didn't bother to disclose the $2,500 fee he was charging until after I had submitted an offer.  We wound up telling him to forget about it and my client bought a different property. 

I think it puts the seller at a disadvantage when their agent charges an additional fee as you have added another hurdle for a potential buyer to jump.  If the listing agent or seller wants to hire a negotiator, that is their business but they should pay for it, not the buyer.

Tom,

 

I agree.  I've consistently have my agent write the fact that I will not pay for negotiation fees in my short sale offers.  I don't want to waste the agents, seller's and just as important, my time.  And as you said above, when I see this is a listing agent requirement, I discontinue my interest and look elsewhere.

Tom, there are many sellers that hire a negotiator before hiring a Realtor.  I am a 3rd party negotiator, hired by sellers.  I hire a Realtor to list the property and my fees are disclosed up front and charged to the buyer.  The buyer and seller pay the SAME either way.  It's a misconception that the buyer pays MORE for the property.  Here is are two common examples:

1) Seller contribution:

House FMV = $300,000

Seller contributes: $5000 in closing costs

Bank NETS $295,000 -

Fannie Mae has specific guidelines that state this fee must be in form of seller concession if borrower is FM backed

2) Buyer pays Cash

House FMV $300,000

Seller brings $5000 cash to closing

Bank NETS $295,000 as seller allowed buyer to reduce offer amount of negotiation fee.

 

These fees should be disclosed RIGHT in the MLS description and on he HUD/in the purchase contract.

It's not UP to a buyer's agent not to SHOW a property.  If a home buyer wants to see a particular property and the fee is properly disclosed then an agent is not doing a proper service to their buyer.

Smitty,

In your first example, if the seller (ie - seller's lender) agrees to pay $5,000 toward my buyer's closing costs, couldn't my buyer have used the $5k to actually pay their closing costs instead of paying it to a negotiator hired by the seller?  If they wind up paying their $5,000 closing cost contribution out to a third party, then it would appear to me that they would be paying $5k more for the house since they now have to pay their closing costs out of pocket instead of using the seller contribution.

In your second example, if the seller brings $5,000 cash to closing, wouldn't the bank then net $305,000 for the house?

My opinion is that if the seller has hired you, then either the seller or listing agent should pay you, not my buyer.  As for not showing a property which has an added fee, I always show my clients whatever homes they would like to see regardless of whether or not there is a negotiation fee.  I always disclose the negotiation fee to them before they see the house if the listing agent has disclosed it.  Once I disclose that they have to pay an added fee, they usually lose interest in the house.

I feel that any added fees should be clearly disclosed to the public in the public remarks in the MLS but our MLS doesn't require that.   Hiding them in the realtor only remarks or not disclosing them at all makes all Realtors look bad.

Tom, the buyer pays the same price for the proeprty either way.

In the first example, the negotiation fee is in the form of a seller credit.  We've been able to get closing costs ON TOP of that, or sometimes not.  Not all lenders allow closing costs or seller credits, which is why we now work in the form of our second example.

In the second example we allowed a buyer to reduce their offer $5000.  So the lender NETS the same either way and the buyer pays the same out of pocket cost for the property either way.

 

Tom MANY times sellers institute charges in a distressed situation where the fees become the responsibility of the buyer, i.e., smoke certificates, sewar inpections, certificate of occupancy, building code violations and many others.  Those fees MUST be disclosed to the buyer up front.  If they want the property, they know they must pay those fees as the seller has clearly stated that is a stipulation of the sale.  The same goes true for short sale negotiation fees.  My fees are ON the MLS in the description up front.  It's up to the buyer if they want to see the house or not.  It's no different than an REO lender requiring a buyer to pay fees typically that are the sellers responsibility.  MOST REO lenders sell "as is" so if there are any fees that the seller must pay, the BUYER ends up paying when purchasing an REO.

Smitty, I can see your arguement, I really can.  Use this scenario, buyer does not need a seller concession and instead wants the price of the home reduced by the $5000.  Did they then pay more for the home by paying the $5000 to the negotiatior?

As you know, I am not a fan of the buyer paying the negotiators fee as I feel that is the listing agents or sellers responsibility but as long as it is disclosed and the buyer agrees, then there should be no issue. The issue in my area is that it is not always disclosed to the buyer.

As far as REO, all of the REO that I handle the seller pays all of the fees.  They pay to get clear title, pay for any liens, pay for needed repairs for financing and pay for all of the sellers normal expenses like commission, title, doc stamps and closing.  I have yet to have a buyer who was required to pay those fees...... except, Fannie Mae is exempt from doc stamps on the deed, the buyers pay doc stamps on the deed which in my county is traditionally a seller expense.

Ugg...sorry crazy day.

That's perfectly fine.  My fees are paid in cash at closing.  If the buyer wants to reduce their price the cost of the negotiation fee, that's what we encourage.  My example of seller concession vs. cash shows that the buyer is paying the same either way and the bank is netting the same either way.  You and I both know seller concessions are not guaranteed.  Not all lenders allow it, which is why we switched to a cash at closing fee. The fee is never an ADDITIONAL fee as everyone believes.

I think most Realtors don't TRUST 3rd party negotiators, which is why they aren't fans.  I get that, however, my reputation is what drives my business.  I have forged amazing relationships with Realtors because of my determination to see the file to closing with the best possible outcome for the seller.  I have TWO attorney groups that oversee my paperwork and we are potentially partnering with a third attorney, who will specifically review all approval letters and accuracy of the files, but allow us control of the process and negotiation.  We work in 4 states right now and are getting licensing for a 5th.  AND we get calls every week from sellers who want to utilize our services and do you know how great it feels to give that listing to a Realtor we've worked with before or call a brand new Realtor that we may want to work with and HAND them listings? We obviously get referrals from multiple Realtors as well. 

(sorry I know I'm patting myself on the back, but I've worked hard to get here)

I don't know enough about REO listings, but in my area if there is a septic that requires passing and inspection, that's a fee the buyers need to pay.  ALL REO's in my area are SOLD AS IS as the lender doesn't want to shell out a $ more.  There are multiple fees passed onto the buyer.  Commission is paid for the seller, but many fees customarily reserved for the seller in a traditional sale are passed along to the buyer in distressed sales.  My company pays for title though.

Stephen, correct me if I'm wrong, but the only exclusions are lawyers under the Safe Act. Realtors are NOT excluded, although, the FTC did say that they would not prosecute Realtors.  Also the Safe Act was created for the protection of consumers.  The primary directive was that fees could NOT BE CHARGED UP FRONT.  So, in essence if a negotiator charged a fee at closing, they would not be in violation of the Safe Act.

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