Sellers agent is charging the BUYER a 1% fee to negotiate the short sale...heres the language:

 

"Processor is negotiating a short sale, or discounted mortgage payoff, on behalf of the Seller and
Buyer of the Property. Processor, Seller, and Buyer agree and acknowledge that this sale is to be
conducted by including a Buyer Discount Fee of 1%(one percent) of the sale price but no less than a $2,500.00 minimum, to be paid to Processor ("Buyer Discount Fee"). The Buyer Discount Fee shall be paid by the Buyer to the Processor as an additional settlement charge to be included on the HUD-1 Settlement Statement and will be paid at the time of closing."

 

and the sellers agent won't even present the offer to the seller unless the buyer agrees to sign this addendum...1) is this legal and 2) are any of you doing this and 3) has it been done to any of your buyers?


 Thanks

Views: 1729

Replies to This Discussion

This is great! Different view points bring out the best of both worlds. NAR and your particular state association still have a lot of work to do regarding different selling situations and the application of specific guidelines to each situation. Here's a good example, our state Realtor association does not recognize BPO work, yet, many agents, qualified or not, do it and broker's allow it. On top of it all, the values have hindered many qualified sales, because, in the BPO agent's world, quantity pays the bills, not quality. The very entity that promotes this (the lenders) the entity that totally understands what is happening, can change if your association puts it's foot down, state by state. I saw this in several other industries and see the signs now. It's easy to side with both Kent or Wendy, as there are logical arguments for both. I'm all for consistency among all. However, in this industry, cash is king!

Here is what I do. Almost always, in a short sale situation, the buyer has cash or is qualified conventional. They understand the short sale process, if the agents are competent. FHA and other GSE's are options, but, strangely, enough, I get quality buyers. When the initial HUD is sent in with the package, I will always provide for a seller concession and on the buyer's side, in additional charges, put the negotiators name and a similar amount to match the negotiator's fee. You need to set this up initially and, what???...disclose, disclose, disclose...to all parties. If there is no request to drop the seller concession, by the lender, you are in. Does the buyer pay more?! Of course! Who gave the buyer the $$? Have fun with it. Above all a professional negotiator is paid properly, as all professionals should be for a job well done. For you double dippers, well, I guess cash trumps integrity. Different viewpoints will always stimulate creativity.
Wendy,

That is the situation in the scenario I encountered...the wife (sellers agent) is a partner with the husband (negotiator) in the company that is getting paid the 1% fee.

Wendy Rulnick said:
Kent - Agree. But there are some agents who create corporations in order to just charge extra. I've seen it. It is going on in my market place.

Kent Dills said:
Wendy, Please re-read the original post. No one is suggesting that the real estate agent is getting paid double. This is simple a way to get a third party negotiator paid and not have to carve that value-added expense out of the Realtors' commissions/pay!
Then you've revealed it - just an agent finding a way around the system.

Steven Jackson said:
Wendy,

That is the situation in the scenario I encountered...the wife (sellers agent) is a partner with the husband (negotiator) in the company that is getting paid the 1% fee.

Wendy Rulnick said:
Kent - Agree. But there are some agents who create corporations in order to just charge extra. I've seen it. It is going on in my market place.

Kent Dills said:
Wendy, Please re-read the original post. No one is suggesting that the real estate agent is getting paid double. This is simple a way to get a third party negotiator paid and not have to carve that value-added expense out of the Realtors' commissions/pay!
Exactly!

Wendy Rulnick said:
Then you've revealed it - just an agent finding a way around the system.

Steven Jackson said:
Wendy,

That is the situation in the scenario I encountered...the wife (sellers agent) is a partner with the husband (negotiator) in the company that is getting paid the 1% fee.

Wendy Rulnick said:
Kent - Agree. But there are some agents who create corporations in order to just charge extra. I've seen it. It is going on in my market place.

Kent Dills said:
Wendy, Please re-read the original post. No one is suggesting that the real estate agent is getting paid double. This is simple a way to get a third party negotiator paid and not have to carve that value-added expense out of the Realtors' commissions/pay!
Let's say that my husband used to be a loan Mitigator for a major lender. He lost his job and now has created his own loan mitigation company (instead of collecting unemployment and complaining about the economy) and is negotiating SS and because he knows the system well he is very good at it. If my husband negotiates some of my own deals...(I'm a broker/agent) you guys are saying that he should work for free because we are related?

3rd party negotiators are very common now days and they charge a fee for their services, it's disclosed in the MLS that the buyer pays X and any buyer's agent knows this ahead of time. Because SS are usually acquired below market value because of the circumstances surrounding the sale, chances are that the buyer is still getting a good deal for his/her money and coming ahead.

Ultimately it is the buyer's decision whether to proceed with the offer or not, if buyer's agent feels that they need to make sure buyer understands that there is a relationship between negotiator and seller's agent then buyer's agent should make sure his buyer understands and if buyer feels like this is unacceptable then they can move on to another property.

Disclosing is best and perhaps the seller's agent should disclose to that seller that he/she is related to the negotiator from the moment they establish a formal listing relationship.

Just my 2 cents.

Steven Jackson said:
Exactly!
Wendy Rulnick said:
Then you've revealed it - just an agent finding a way around the system.

Steven Jackson said:
Wendy,

That is the situation in the scenario I encountered...the wife (sellers agent) is a partner with the husband (negotiator) in the company that is getting paid the 1% fee.

Wendy Rulnick said:
Kent - Agree. But there are some agents who create corporations in order to just charge extra. I've seen it. It is going on in my market place.

Kent Dills said:
Wendy, Please re-read the original post. No one is suggesting that the real estate agent is getting paid double. This is simple a way to get a third party negotiator paid and not have to carve that value-added expense out of the Realtors' commissions/pay!
Here is my two cents...

There are a multitude of short sale negotiators out there and there are a multitude of ways they can be compensated. Here are several that I have come across...
1. Listing agent takes the short sale listing and negotiates the deal and the commission paid by the lender pays both the listing agent and the co-op agent.
2. Listing agent creates a separate company and charges the purchaser $2000, $3000, $4000 or more to negotiate the short sale
3. Listing agent sends the short sale to another firm to be negotiated and pays for it out of his side of the commission.
4. A professional negotiator is hired to handle the short sale and their fee is incorporated into the HUD-1 as a short sale negotiation fee which is in addition to the commissions being charged.

My issue is with the listing agent that creates a corporation to handle the short sale and attempts to charge the purchaser for the service of negotiating the deal. To me that breaches the fiduciary responsibility the listing agent has with their seller as they are stating that we will not negotiate unless the purchaser agrees to pay the fee. What if the purchaser does not want to pay the fee? Then of course they will not submit that offer to the lender and they are not providing their client the best service possible. The goal is to sell the house for what it is worth and save the client from foreclosure. I for one think the seller would have a case if a bonafide offer to purchase is avoided simply because the listing agent wants to line their pockets. Why be greedy? Short sales are not that difficult in that thousands of dollars need to be charged to the purchaser. The agent who takes the on the responsibility for the the listing should simply assume this is a duty they owe to their client and handle the negotiations themselves. I hope at least in my state that we will soon see the end to this type of crap.

Again just my two cents.
Ok, hers the Deal I am respresenting the seller and this is exactly what the Bank is doing to the Buyer , I will not presenet this to Selling AGENT this I am in california and this from what I understand is a RESPA Viloation, does anyone have a website they can refer me to so I can get RESPA Vilaotion codes to presen the Bank.......
I feel that a negotiator is someone who has been hired by the listing agent, so the listing agent should pay the fee. For example, I've never charged my clients for my transaction coordinator since this is also someone I have hired to do the job that should already be included in my commission.

I can and have negotiated short sales, but they do take up a lot of time and they make me frustrated and angry. I also negotiate the split so that the negotiator gets 33% of what I get.

And just an aside, it doesn't really seem to be in your seller's best interest because 1% of the sales price makes a huge difference to VA and FHA 0-5% down buyers, plus anyone who wants to update their new home.
And if the buyer is paying for the negotiator, can he choose who he wants to use?

And Nedy, I have no problem with you using your husband as a negotiator and certainly don't expect him to work for free. As long as you disclose that the negotiator you use is your husband and that he will be receiving 1% from the Buyer. And you already say you do.

Nedy Blanchard said:
Let's say that my husband used to be a loan Mitigator for a major lender. He lost his job and now has created his own loan mitigation company (instead of collecting unemployment and complaining about the economy) and is negotiating SS and because he knows the system well he is very good at it. If my husband negotiates some of my own deals...(I'm a broker/agent) you guys are saying that he should work for free because we are related?

3rd party negotiators are very common now days and they charge a fee for their services, it's disclosed in the MLS that the buyer pays X and any buyer's agent knows this ahead of time. Because SS are usually acquired below market value because of the circumstances surrounding the sale, chances are that the buyer is still getting a good deal for his/her money and coming ahead.

Ultimately it is the buyer's decision whether to proceed with the offer or not, if buyer's agent feels that they need to make sure buyer understands that there is a relationship between negotiator and seller's agent then buyer's agent should make sure his buyer understands and if buyer feels like this is unacceptable then they can move on to another property.

Disclosing is best and perhaps the seller's agent should disclose to that seller that he/she is related to the negotiator from the moment they establish a formal listing relationship.

Just my 2 cents.

Steven Jackson said:
Exactly!
Wendy Rulnick said:
Then you've revealed it - just an agent finding a way around the system.

Steven Jackson said:
Wendy,

That is the situation in the scenario I encountered...the wife (sellers agent) is a partner with the husband (negotiator) in the company that is getting paid the 1% fee.

Wendy Rulnick said:
Kent - Agree. But there are some agents who create corporations in order to just charge extra. I've seen it. It is going on in my market place.

Kent Dills said:
Wendy, Please re-read the original post. No one is suggesting that the real estate agent is getting paid double. This is simple a way to get a third party negotiator paid and not have to carve that value-added expense out of the Realtors' commissions/pay!
I too feel that the negotiators are being hired by the Listing Agents and thus the Listing Agent is responsible for paying them. As mentioned, I pay my transaction co-ordinator and all my other fees for marketing my listings, maintaining them etc. out of my commission. Short Sales ARE harder, take more time, and require negotiation skills. If a List Agent is not capable of doing Short Sales, and are just trying to get more listings, then that same List Agent is also responsible for handing their Shorts to negotiators and paying them for it. Seems logical..
I agree with the last two posts. The listing agent should be paying this fee and not the buyer. The biggest issue that I have from the first post is that the listing agent won't present the offer unless that verbage is included. That is a major problem because the listing agent has to submit all offers and the buyer has the right to make an offer and exclude that verbage, it would then be up to the seller to counter offer.
Listing agent wants to list short sales and use a 3rd party, fine, let the listing agent pay for the 3rd party. Just my opinion.
What is next, listing agents requiring that the buyer pay the commission or they won't submit the offer?
Hi, Jeff -

You don't say where you are from, but if it is California, you might be in luck. The RE Commissioner put out a rather strongly worded document about expecting a Buyer to pay the negotiator fee.

http://dre.ca.gov/pdf_docs/ca/ConsumerAlert_ShortSalesUpdate.pdf

Charging the buyer these fees may be a violation of RESPA as a junk fee. There is no value-added for the Buyer since the Listing Agent/Seller is working with the lender on behalf of the Seller. Also, raising the sales price to cover the fee while giving the money back in the form of "closing costs" is a bundle of problems and likely, fraud, on many levels - such as re-routing money that the bank would have probably kept for themselves; using the charge as a way for them to get more commission money by hiring someone to do the work that should be a part of his duties.

Anyway, apparently the CA DRE have gotten a ton of complaints about this issue. This Alert begins with this statement in bold type and underlined:

This DRE Short Sales update is written on the growing, questionable, and sometimes unlawful practice of short sale negotiators ("SSN") requiring/compelling Buyers to pay the SSN's fee.
I am in Florida but I agree with everything that you say here

Lisa Henderson said:
Hi, Jeff -

You don't say where you are from, but if it is California, you might be in luck. The RE Commissioner put out a rather strongly worded document about expecting a Buyer to pay the negotiator fee.

http://dre.ca.gov/pdf_docs/ca/ConsumerAlert_ShortSalesUpdate.pdf

Charging the buyer these fees may be a violation of RESPA as a junk fee. There is no value-added for the Buyer since the Listing Agent/Seller is working with the lender on behalf of the Seller. Also, raising the sales price to cover the fee while giving the money back in the form of "closing costs" is a bundle of problems and likely, fraud, on many levels - such as re-routing money that the bank would have probably kept for themselves; using the charge as a way for them to get more commission money by hiring someone to do the work that should be a part of his duties.

Anyway, apparently the CA DRE have gotten a ton of complaints about this issue. This Alert begins with this statement in bold type and underlined:

This DRE Short Sales update is written on the growing, questionable, and sometimes unlawful practice of short sale negotiators ("SSN") requiring/compelling Buyers to pay the SSN's fee.

RSS

Members

© 2024   Created by Brett Goldsmith.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************