Should I pay the negotiator fee?

Hello I'm near the finish line to closing on a short sale, it's been rough but I'm almost there! One issue I'd like to discuss is this. In the beginning I was never aware of the terms that came with the sale not once was it disclosed to me that I would have to be paying the negotiator fee. So when my agent asked me to give a deposit to a certain guy, I said well wait what is this for? he had told me it went towards my final payment. Later down the months I come to realize that it wasn't he himself told me that the thousand dollars is a separate fee that "all short sale transaction have to pay" I've been doing my research and realized that this is not true and this fee can pretty much be thrown around anywhere. The agent is a friend of mine he had just got started out and coming to this forum I realized that was a HUGE mistake. So i guess my question is should I just eat the cost for the agents mistake? Or is there something I can fight this with because I was misinformed. I believe it is up to the agent to disclose all terms and fees about the property before I even step foot in the condo. This was never done. I'd really appreciate everyone's opinions on how to handle this situation, thank you.

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Permalink Reply by Gabe on April 15, 2012 at 5:36am
yeah he definetly had people looking over the transaction the whole time, I understood that it could have been a mistake and that happens but he is taking it as im trying to swindle him, which is not the case, he kind of took it worse then me, while handing the keys to me and just walking away. I do value his friendship, but it can seem like more than him, he can be stubborn and hold grudges, but I came to him to resolve, now its on him. Ive done my part. I believe the verse you are mentioning is Matthew 18:15-17
Permalink Reply by ALLAN ARTHUR on April 15, 2012 at 7:44am

Gabe,

Do what is right, if you agreed get it done. Get it behind you life is too short and home ownership way to important for your time on this planet. Your whitness would be to do what you agreed to do, and Give God the Glory, that you can!

God Bless!

Permalink Reply by Stephen B. McWilliam on April 15, 2012 at 4:26am

NAR Code of Ethics requires the Seller provide consent to any such charge if collected by the broker. The Buyer can provide a credit on page 1 of the HUD-1 for an amount that would be equal to that of the fee.  However, it would be considered a RESPA violation for the Buyer to be directly charged the fee if a federally insured mortgage is involved. Such a violation could result in the Buyer suing the entity collecting the fee for 3 times the amount plus attorney fees.  Furthermore, in Florida only the speicifc real estate brokerage processing the transaction or an attorney actually representing the Seller are permitted to charge such a fee. Short sale processing is considered loan origination which requires a MLO license.  Florida real estate licensees are exempt from MLO licensing while processing their own transactions.

Permalink Reply by Joseph Alfe on April 15, 2012 at 4:31am

You are incorrect. Both Fannie and Freddie purchase guidelines specifically allow the buyer to pay third party short sale negotiation fees.  FHA/USDA Guidelines do not specifically allow these fees (nor do they prohibit), but allow "reasonable and customary" fees to be charged to buyer. Since Fannie/Freddie allow third party negotiation fees, they are now considered "Reasonable and Customary."  Only VA does not allow buyers to be charged these fees, but then again, VA doesn't allow any fees to buyer.  No matter what, all fees must be disclosed on HUD-1 at close.

Permalink Reply by Stephen B. McWilliam on April 15, 2012 at 4:38am

Respectfully, I am not incorrect.  RESPA specifically prohibits the Buyer being charged any fee for which the Buyer did not receive any service in return.  The GSEs permit the Buyer paying the fee.  RESPA requires the fee to be handled as a credit to the Seller.  Example: Seller is paying for the Owner's title policy. The Buyer must pay for the policy and the Seller provides a credit to the Buyer.  The Seller cannot be charged the title policy directly.

Permalink Reply by Bryant Tutas on April 15, 2012 at 5:08am

So....the buyer can pay the fee. It just has to on the HUD properly. The same as the owners title insurance policy (except in reverse). Unless of course the buyer is paying cash, then it can be paid anyway they want.

Or the buyer could sign an agreement, at time of contract, with the negotiator hiring him to handle the short sale on their behalf.

Permalink Reply by Stephen B. McWilliam on April 15, 2012 at 5:13am

You were doing great up to the point "or the buyer could sign an agreement".  No, the buyer does not receive the service.  The processor is working for the benefit of the Seller.  One can play word games to claim otherwise but one would only be exposed to a RESPA violation.  Example: the Seller "requests" the Buyer to utilize the Seller's title company but will not pay the policy. Should the Buyer refuse the Seller will not sell.  Therefore, it's a requirement made in violation of RESPA.

Permalink Reply by Gabe on April 15, 2012 at 5:37am
Is RESPA only in florida? I live in california.
Permalink Reply by Stephen B. McWilliam on April 15, 2012 at 5:48am

RESPA is federal. Real Estate Settlement Procedures Act.  If you feel RESPA has been violated you can actually file a claim in small claims court.

Permalink Reply by Richard OBrian on April 15, 2012 at 4:33am

I feel for you Gabe.  When anyone enters into a real estate transaction you must read all the paperwork and ask questions of your Agent.  Gabe, it sounds like you are stuck with the 1,800 if you really want the home, more on this later.

However this points to another issue with short sale, the uses of a 3rd party negotiating service.  I believe if a listing agent can’t do there own short sale negotiations you already have an issue. When I’m representing my buyer I always fight off any attempts for my buyer to bring any money to the deal for negotiating the short sale.

Janet and I do not use 3rd party negotiating service for any of are short sale.  We have ponied up money for our buyers for 3rd party negotiator fees.

Gabe, I would be a bit annoyed at my (friend) Agent for getting you into this, ask him to split the cost.  (another reason to keep friends as friends and not for business)

 

Should I pay the fee? Yes why indeed should you pay...

Permalink Reply by Gabe on April 15, 2012 at 5:44am
well the home is already mine, I have the keys everything is done, and I havent paid the rest and they have asked for it. I think they made a mistake which inturn they will eat up the cost.

Learn $1000 life lesson for this transaction thats for sure.

had a questions though during the last couple days I was trying to get a detailed email on why I was paying the fee and all that, they never got the straight answer and then would be like anyways you have to sign this. So to stop everything in its tracks I called out fraud for the reason that it seemed like they were trying to avoid it. now I cleared the fraud claim with a letter, but will anyone get hit with that fraud claim even if I cleared it up? just wondering how that works
Permalink Reply by Satar Naghshineh on April 15, 2012 at 12:41pm

Chances are no one knows why you have to pay! All they know is there was a short sale and someone needed to negotiate the short sale and the seller didn't have money to pay for it and the listing broker didn't want to use his/her commission to pay for it so they thought the cool thing to do is to throw it onto you, the buyer.

Like I stated before, outside of the HUD is tricky and maybe in violation of RESPA. The proper way outside of the HUD was for the listing broker pay for the services and then have you pay your broker (your friend's boss) directly. That way you paid for services that belonged to you and that do not have to show up on the HUD.

Within the HUD, they should have disclosed these expenses to you properly, shoved them on the seller side of the HUD and if rejected, have them paid by you on the buyer side of the HUD.

If they collected the $1000 before the date on the approval letter, they also violated California law. Look at www.dre.ca.gov for the law regarding collecting upfront fees on loan modifications (it applies to short sales as well as it is a form of debt settlement).

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