Additional Commissions? Normal?
This is my third short sale deal but a first where the seller's agent asked for essentially three components of commissions.
First, a $2500 to be paid to some "short sale and consulting services".
Second, a flat $2495 to be paid to the realtor as "additional commission" for the service of the company.
Third, 6% commission to be split between buyer and seller agents to be paid at the discretion of the lenders or lien holders, and if they approves less than 6%, the buyer pays for the shortage.
Is this typical? For me to shoulder $5000 PLUS up to 6% commission whatever the lenders don't feel like paying?
My attorney says I can write into the contract a contingency which states that if the lender approves less than 6% commission, I can cancel the contract within 3 days of seller's written notification of lender's approval and get my deposit back, but writing that in could cause the seller to not sign the contract.
Thoughts?
Replies to This Discussion
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Permalink Reply by Bryant Tutas on
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You are correct that the clause about the deposit being non-refundable needs to be very specific. Maybe state that it won't be refunded over any inspection issues outlined in the inspection report.
Sounds like your attorney has your back.
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Permalink Reply by Smitty on
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I would agree with that. It needs to be cut and dry. Keep in mind seller's are strapped so they don't have the funds to fix a property. You have to keep that in mind when putting together your offer so make sure you cover yourself.
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Permalink Reply by Jim Schneider on
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The problem I have as a buyer's agent when this sort of thing comes up is this, although you can lower your contract price to compensate for these additional fees, the seller's lender is not going to reduce their required net a similar amount. The reason the seller's agent is asking you to cough up these short sale negotiator fees is they know that the seller's bank won't pay short sale negotiating fees.
So if you were going to offer $300,000 and the seller's lender would agree to the resulting net, but you instead offer $292,000 the lender may very well ask you to come up to $300,000 later. The seller really can't promise you a great deal because they can't approve your price, their lender has to do that.
I see from your comments that you like the house, but do you like it enough to over-pay for it? Most of my clients looking to buy short sales are doing so because they feel they'll get a good deal in exchange for having the patience to wait four months to buy a property. It seems like the seller/seller's agent have set up a situation where you are unlikely to get a good deal. Could you find another short sale with less agregious terms? Or a traditional sale or REO sale where you know what deal your getting and the terms aren't so harsh?
In any negotiation, you need to consider what's your NBANA, Next Best Alternative to a Negotiated Agreement. In other words, how good is your plan B looking now that you know what these people are asking?
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Permalink Reply by Joseph Alfe on
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Here is your problem with this: You are assuming that the lenders required net will be what you think it will be. People, short sales are a negotiation, and it really doesn't matter what the bank counters with or guidelines are etc. Yes, they have an effect, and there is always a range or wiggle room though. I guess this is the main difference between a negotiator and a facilitator. If a lender counters you, don't just roll over. Some of my deals have 4 or 5 counters back and forth, and we end up closing at numbers that are usually lower than what buyers think is possible. Again, do not assume what a lender will or will not approve, and if you set up the deal properly and have the right information, you will be surprised on what you can get approved.
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Permalink Reply by Jack Hampson on
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Yes but all I can do is to put my best offer on the table, that's all I can do. I have no control over the bank's decision, or the seller's decision to hire someone who might be looking to benefit from not necessarily getting the best deal for them.
All I can assume is the same boiler plate language that affects me would affect the next buyer the same way.
I am an investor so I am only going to close deals that makes sense to me, I am not going to go ohhhh and awwww over some nice pond in the back or a 10" diameter rain shower head, which an owner occupied might fork over extra $ for.
The next deal or the previous deal have it's own unique issue, nothing is ever perfect. ESPECIALLY in Miami, we got the shadiest realtors here, no kidding1
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That's funny! I jokingly asked earlier if this was a Miami realtor/negotiator. I work mostly in PB and Broward, buy I knew this sounded like something you'd see in Miami. As long as you keep the emotion out of it, and you're going with eyes wide open, keep us informed.
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Permalink Reply by P Nicolas Velecico on
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I doubt the lender would even approve a HUD with those fees to the agent , they would just want the seller to pay $4995 more in the way of the price , not in fees . But if it does get approve please let us know who the bank is .
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Permalink Reply by Mega-Pros on
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I agree with Nicolas, let us know if that HUD gets approved by the lender with those fees. For the record, I do require earnest money deposited and inspections to be done within 10 days of MA between Seller/homeowner and buyer, not seller/lienholder and buyer. I want the buyer to have skin in the game as well and want to minimize risk of a last minute walk-away for my seller. Those fees do sound exhorbitant to me. I agree with someone else's comments here who said pay one or the other; deficiency in 6% commission (if any) OR flat fee upon successful closing of this transaction. Best of luck!
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