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Stephen,
I have a question about the SAFE ACT. You state that only licensed loan originators can negotiate a short sale for the seller and collect a fee?? I have read through the Act and I cannot find anywhere in there that states only persons with a license for mortgage loan origination can charge a fee. Please let me know, I am a short sale negotiator but am not a mortgage originator.
Lately here in Central Florida there are more and more companies that do not charge anything. A lot of these, people/companies/title companies, should not be doing them at all whether by new rules or incompetence. From talking with short sale agents across the country this not charging is becoming a trend. Don't get me wrong they do get paid but not by the agents.
You will find that more and more lenders are fast doing away with dealing with 3rd party companies. I do short sales for other agents and have for a couple of years now. Lately because I am not the listing agent I was not able to process the file with a couple of lenders.
Short Sales rules and compliance issues change all the time and are still evolving. The main focus should be, do they have the expertise to get the job done.
I understand your frustration. You feel this should have been disclosed to you upfront. At this point, you have to determine if paying this fee along with the approved short sale price is a good deal for you. Here's a tip...most buyers buying a short sale are doing so because they feel they are getting a DEAL on the property. And technically, you SHOULD be getting a deal, otherwise WHO would want to buy this property? So in realizing this, another common practice is for the SELLER and LISTING AGENT to make sure they accept a BUYER who realizes they are getting a DEAL AND one who will STAY in the process and understand they may have to incur FEES in the process to GET this deal. FEES meaning a negotiation fee as well as being flexible in understanding they MAY have to come up with any FEE difference between the 1st and 2nd, if seller doesn't have this. However, this should have been disclosed to you in the beginning and a CAP of costs agreed to by you up front JUST in case these fees came into play. Fees can range from $500 to 1%,2% to as high as 3%.Each state is different. If the fee, on top of your offered price still constitutes a GOOD DEAL...then you may have your answer. Hope this helps.
Each state has implemented the SAFE Act differently. In Florida, the definition of a MLO includes negotiating the terms an existing residential mortgage. Florida's Office of Financial Regulation ("OFR") has interpreted that so as to include short sales. You would need to check with the MLO licensing authority in your state to determine their position based on the legislation in your state.
James,
To answer your question as written - "It's negotiabe". I know that answer seems boiler-plate but it's true. The "average" is typically about 1% of the final sale price. Now having said that - You as the BUYER, should NEVER have to pay a negotiator fee. That's a decision made by the Listing Agent and the Seller and they cannot make a decision FOR YOU to pay for something you didn't agree to beforehand.
If you want to pay it - fine - that's your decision.
Best of luck in finding the right home to buy and the best seller to buy from.
Thom Colby,
Broker
Newport Beach and Palm Desert CA
Thom is RIGHT ON again. If you don't want to pay the fee, move on. If you DO want the house, and that is a stipulation of the sale then pay the fee.
That's Interesting......
I'm a licensed Broker and act as 3rd party negotiator for MANY Brokers and Agents throughout California (as well as listing and selling my own transactions which we never double-end). On 3rd Party negotiator deals I get paid a pre-agreed-upon fee at closing (and through escrow). All parties to the transaction; Seller, Buyer, Sellers Agent & Broker, Buyer's Agent & Broker, and I sign an Acknowledgement and Disclsoure of the fee. This 2 page Agreement spells out clearly my role, who I work for and what actions I am responsible for. In addition, we sign an Agency Disclosure as required by our State.
Here's the the difference I get paid ONLY BY the Listing Broker from the LISTING Broker's portion of the commission. The Buyer, Buyer's Agent and Buyer's Broker NEVER pay anything - EVER.
Per my Agreement, the Listing Broker / Agent is not allowed to charge anyone else for the fee - period.
It's a good business, it's fair to everyone, and it's legal as a Broker to Broker payment.
Thom Colby
Broker
Newport Beach & Palm Desert CA
You said "Real estate licenees paid a separate fee...." there is no separate fee. I am paid a portion of the Listing Broker's commission to process a short sale for them which is perfectly legal. The commission is not increased for this service it is taken from whatever amount they receive - no different from a referral fee to another Broker. And, I am properly licensed in my State.
I doubt both of my attorneys are wrong.....
I'm not in Florida. Although I do plan to get my Broker's license there.
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