Short sale negotiator and Atty- last minute, buyer pays from 3% contribution Part 2

This is a contunuation of my broker's post Aug 22.  I represent the buyers. We are 2 days from closing and 3rd party negotiator presented the following on their company letter head trying to get paid. They never disclosed how they were getting paid during our negotications nor was it noted in the MLS.  

 (“S & S”) in cooperation with Christian, will negotiate the short sale for the above referenced property. As part of its services S & S will:
-Negotiate the short sale with all note holders.
-Negotiate with Associations as may be needed.
-Coordinate document gathering.
-Coordinate efforts with sellers, buyers, realtors, attorneys and mortgage representatives.
-Work on extensions if needed and desired by all parties.
-Keep all parties informed of the process throughout and/or be available for updates as
needed.
As compensation for its services, S & S, Inc. will charge the releasing note holder a fee of up to Three Percent (3%) of the sales price (“Negotiation Compensation”). S & S, Inc.’s negotiation compensation will be collected from the releasing note holder at the time of closing and not from the parties to the transaction or their agents. The parties acknowledge and agree that S & S’s compensation may appear on the buyer's side of the settlement statement, the seller's side of the settlement statement, or both. If any part of the negotiation charge is contained on the seller’s side of the settlement statement, the seller understands and agrees that the charge was negotiated with the note holder specifically for short sale negotiation purposes, and the seller would not otherwise be entitled to receive those funds as part of the closing or outside of closing. If any part of the negotiation charge is contained on the buyer’s side of the settlement statement, a credit will be given in an amount greater than or equal to the amount being charged. The resulting net charge to the buyer will be $0.00. The buyer understands and agrees that the charge was negotiated with the note holder specifically for short sale negotiation purposes, and the buyer would not otherwise be entitled to receive those funds as part of the closing or outside of closing.
Seller:___________________________ Buyer:_________________________________
Seller:___________________________ Buyer:_________________________________
Listing Agent:_____________________ Selling Agent:___________________________

 

The buyer's do not want to sign it.  Can the negoticator hold up closing?  Need help.  BTW the buyers are financing.

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Should have been signed at time of contract

I agree.  Firms here in SOFLO will do this.  Here it seems like the negotiation co. got buyer consessions from the  seller's lender, without the buyer being aware; which means the prelim HUD was submitted with consessions, that were not in the contract, or done by addendum (assuming the broker didn't just fail to mention this).

 

That is exactly what happened.  We called FAR legal hotline when we found out about the concessions on the HUD. They advised me to tell buyer to seek legal advise.  Buyers did and decided not to sign the addendums prepared by the negotiator. At that point the negotiator and the title agent knew that were not getting paid and began to badger me and the buyers with phone calls and emails.  Finally, it seemed all was OK until yesterday.  Now the title agent is being uncooperative.   Oh, the listing agent gave the lenders appraiser estimates for roof repairs. The buyer paid to repair the roof because EverBank added a condition for loan approval and seller has no money.  We needed to get an extension from short sale lender.  it took Chase over a week to give a written approval for extension leaving 7 work days for repair and final clear to close for loan.  Negotiator said we must close and fund today. Can not get anymore time from Chase Loan package should be ready this morning.  Chase has given 2 extensions for closing.  Any suggestions?

Have been trying to find out if these companies need to be licensed in Florida?

Your buyer is into this for an inspection fee, appraisal fee, and roof repairs. It sounds like they really want to close th sale. The negotiator is due some compensation for their services and it looks like they are building it into the HUD so the buyer doesn't have to come up with and cash. The disclosure is simply saying "our fee may show up in one or more places on the HUD.

It is indeed unfortunate that lender policies don't allow a line item for negotiators that are routinely used to complete a short sale transaction. Never the less they don't and negotiators have to squeeze the fees in. I would;

1. Verify what the compensation actually is

2. Validate it's payment is not violating and of your state laws regarding 3rd party fees.

3. Verify it is not a conflict for the buyers financing lender (don't see how but underwriters have their noses in everything these days)

If all is good close the deal. Why would you not? Your buyer is financially invested, wants the property, and is not being charged for the SS Negotiators fees. Sounds like alot of unnecessary drama over technical issues regarding how the 3rd party is paid to me. 

I'm a 3rd party negotiator and buyer's pay my fee and this thing REEKS to me.  No way would I present this at this stage of the short sale.  It should have been presented at the time of signing of PNS.

I really don't even understand it.  If they are charging the "releasing note holder" then why are you even involved?  SOOO confusing.

Seller concessions are allowed and so are negotiation fees and charging buyers, but not AFTER THE FACT!

Have buyer get an attorney.

This is Bizarre.  Title agent emailed the buyers loan package as received from the lender without the final HUD, total funds for buyer to close and no wire instructions. Buyers Lender has not approved the HUD yet.


Are you a 3rd party negotiator in FL?

Does anyone know if in Florida 3rd party negotiators have to be licensed?

See if you can get HUD1 from your buyer's lender.

How was this addressed in the Borrower/sellers approval letter? (another PRO to the fact buyer should recieve copy!)

I believe in FL, you need to be an attorney or licensed real estate agent to negotiate short sales, Jeff or Bryant could probably comfirm this.

You might also want to check if S & S inc is real! Sunbiz.org

Approval letter did not have a break down of the net to bank, only a total.  I checked sunbiz and the company is active.

Depends on who you ask.  Most, do it "in conjunction with" or "as part of" a law firm/lawyer title service.  The general consensus is that you must be a Licensed real estate agent(gray area when serving as a 3rd party negotiator, not for your own client) or an attorney.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Also, I agrre with Ron.  This is not the way businees shoul be done.  And, then your buyer will get the consessions.  It serves them right!

 

 

 

 

 

 

 

 

 

 

 

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Ron Scribner has the best advice here!  

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