3rd Party Negotiator Fee Denied by FNMA...Now He's Trying to Get Agents to Pay From Commissions

Hello all, I am looking for some insight on this situation.  Fannie Mae approved this short-sale (again).  When first approved, they approved the 6% agents commissions, and the 3rd party negotiators fee.  The seller refused to sign an addendum from the MI co requesting a promissory note.  It was resubmitted asking to drop the MI addendum requiring the promissory note.  The short sale was approved, dropping the promissory note condition and the net amount required remained the same.  The one change, Fannie Mae removed the 3rd party negotiators fee from the prelim HUD and is no longer willing to pay it.  Now the negotiator is stating that his fee needs to be paid by the agents out of their commissions or the deal is dead.  Just wondering your thoughts on this.  I spoke with my broker, who stated that the negotiator is "trying to make his problem, our problem" and that "he needs to fight for his fee just like the agents do; it is between him and the bank."

Thoughts?

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The negotiator should have had a clearly stated agreement with all parties before he started the negotiations.  That agreement would / should have stated who pays his fee and if not approved by the lender / investor how he would get paid.  There should have been an Acknowledgement and Disclosure between all of the parties as well as the Brokers.

Who hired the negotiator?  The Listing Agent?  The Seller?  The Buyer?  Whomever HIRED the negotiator is who should pay him.

BTW, the negotiator cannot "kill the deal" - he is not a party to the transaction - only the buyer and seller are, he cannot place a lien on the property either.  if he interferes with the transaction he may have bigger problems than he wants. 

Thanks for the insight Thom. I don't know who hired the negotiator, but from my understanding it was the seller. Also, in looking through my files, there are no agreements from the negotiator that were signed by me or my buyer.

Thom is spot on here.  Whoever hired the negotiator should pay him.  He can not hold the deal hostage.

I have a current transaction ( listing ) being negotiated by a law office third party negotiator, and the charge they put in the HUD 1 for their services is much much more than my commission (4%). 

Now after reading this article, I'm worried that the lender ( Wells Fargo ) will not pay the negotiator which was hired by the seller ( seller paid a retainer of $300 already )...will take all my commission? and charge the seller for the difference?  That's Crazy! ! !  

Lilibeth,  Did you and / or your Broker agree in writing to this negotiator?  If not, then how can the negotiator charge you / your broker for the fee?

 

I agree with Thom.  The banks/FNMA, Never pay the fee.  It was Never approved on the HUD, on the seller's side.  If the negotiator doesn't have an agreement where the Buyer is paying, he probably tried to get a Seller concesion to the Buyer, and he would take it out of that.

These guys that try to hold the deal hostage, because they never had an agreement for anyone to pay them, should be hung.  By the way, I am a 3rd party negotiator, as well as an agent.  If the negotiator is separate from the title co., simply have the owner sign a new 3rd party authorization to someone else, and revoke the authorization for the current one.  Proceed to close without them.  An issue may arise because of some "disclosure" or "agreement" the seller signed, even though it probably said he wouldn't have to pay; tell the negotiator, his firm and the attorney they probably work with, to SHOVE IT.

Does this happen to be in S Florida?

 

Thanks Wayne. No, this is NJ and he is not tied to the title co. He was hired by the seller well before me or my client came into the picture. His manner of communication is always confrontational and accusatory. Even in this particular instance, he didn't ask if we will contribute to his fee, he stated that we must and it must be settled in order for the deal to close.

There is a seller's concession in this deal and always has been. Just for some reason, when it was re-approved, FNMA dropped the line on the prelim HUD which contained his fee; although, it had been approved every time prior. This negotiator has always held everything close and basically been less than forthcoming. I have been on the buying side to a few short sales and never ran into someone like this. In my opinion, all of the problems along the way with this deal are purely because of this negotiator.

Jay, I have Never seen FNMA pay a negotiation fee.  I don't think it Ever was approved, and they're just telling you that.  I assume he had a disclosure/agreement with the seller, whereby the seller agreed to let these guys do the negotiation, but at no charge to the Seller.  Therein lies the problem.  Someone needs to inform the 3rd party that he can be replaced in about two minutes.    

Jay, find out what other transactions this negotiator has worked on - ask for a lilst of successful closings from the negotiator or from your Realtor Community.  Then, call them and find out how many s/he go paid for from the servicer / investor and how many the agents had to fork over their commission to.  It will be interesting to see what the percentage of success is......

This is not your problem nor the agents problem if it wasn't disclosed up front.

I negotiate a lot of short sales for the Listing agents and get paid by them from their commissions through escrow. It is understood at the beginning what my fee is and I have never had any problems getting paid. There are a lot of newer agents or seasoned agents who are not qualified or do not want to deal with the stresses of short sales. I have helped several families and agents and it is always been a rewarding experience not just a paycheck.

The negotiator fee is never allowed on a HUD, (at least none that I have done) the way the banks look at it is they have their own negotiators so they will not nor should not be paying for a third party.

Who ever hired the negotiator should pay but in either case they cannot hold up the transaction.

 

 

If it's not on the HUD, doesn't that constitute Fraud? 

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