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

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Replies to This Discussion

I would bet the Seller doesn't know about that so it would appear he's not working in his Sellers' best interest which could certainly be a fidcuiary problem that you could report to the Board.
Steven,
1. Yes it's legal.
2. I've seen it done before, currently, and probably in the future.
3. Hasn't "been done to any of my buyers" but that's just coincidental.
Explanation: I have seen similar agreements which cover the cost of having a professional negotiating company handle the negotiations (vs the Listing Agent) and it has resulted in positive results. As a result of the professional negotiations, the buyer purchases for a discount off of market price to the point that the 1% Buyers Discount Fee is more than made up for (i.e., offset).
Steven, if you'd like to email me directly my email address is [email protected] or you can call me at 817-495-8028. I'd be more than willing to discuss in more detail if that would be helpful!
Steven - At issue is the competitive disadvantage of marketing a property with a 1% premium. All things being equal, the buyer is paying more for the property, and would probably pick an equal home of lesser price.
Thanks Kent...I will give you a call when I am in the car tonight if that is ok.

Kent Dills said:
Steven, if you'd like to email me directly my email address is [email protected] or you can call me at 817-495-8028. I'd be more than willing to discuss in more detail if that would be helpful!
It just appears to me to be a conflict of loyalties...a negotiator being "hired" by the sellers agent, being paid by the buyer, but working to get the best terms for the seller too? Doesn't make sense.

Kent Dills said:
Steven,
1. Yes it's legal.
2. I've seen it done before, currently, and probably in the future.
3. Hasn't "been done to any of my buyers" but that's just coincidental.
Explanation: I have seen similar agreements which cover the cost of having a professional negotiating company handle the negotiations (vs the Listing Agent) and it has resulted in positive results. As a result of the professional negotiations, the buyer purchases for a discount off of market price to the point that the 1% Buyers Discount Fee is more than made up for (i.e., offset).
This is a common occurrence, more so than most believe. Many agents don't have the experience nor desire the tedious work needed to conduct a short sale successfully. Several broker friends of mine employ professional negotiation companies because they feel the agents best use of their time is to build their pipeline, not spend that marketing time to negotiate. Again, we come down to the issue of disclosure. All parties must understand what is going on here.
Please remember, the only advantage the seller has in the short sale process is the opportunity to shed debt and an event other than foreclosure appearing on their credit report. We are not cheating the seller by adjusting the sale price. Yes, there are cash incentives from the lenders and GSE's now, but the seller gets this when the sale goes through. So agents, your job is to close the deal, on both sides. Buyer should already get a discounted value, otherwise it isn't a short sale. Guess what? Lender is not opposed to the negotiation fee. I've seen as much as 4% plus paid out.
Alan, you took the words right out of my mouth....and stole my thunder! Kidding! You're right on!
Sure...I'm on board with the lender paying a 3rd party company...but I think agents are going to eventually have a problem requiring buyers of their listings to pay ANY of the sellers contractual obligations, even if it is on the HUD...but, I might be wrong!

And this reminds me of another similar issue...the liting broker charging the buyer a transaction fee...I am starting to see this a lot.

Alan Remigio said:
This is a common occurrence, more so than most believe. Many agents don't have the experience nor desire the tedious work needed to conduct a short sale successfully. Several broker friends of mine employ professional negotiation companies because they feel the agents best use of their time is to build their pipeline, not spend that marketing time to negotiate. Again, we come down to the issue of disclosure. All parties must understand what is going on here.
Please remember, the only advantage the seller has in the short sale process is the opportunity to shed debt and an event other than foreclosure appearing on their credit report. We are not cheating the seller by adjusting the sale price. Yes, there are cash incentives from the lenders and GSE's now, but the seller gets this when the sale goes through. So agents, your job is to close the deal, on both sides. Buyer should already get a discounted value, otherwise it isn't a short sale. Guess what? Lender is not opposed to the negotiation fee. I've seen as much as 4% plus paid out.
Hmmm, maybe I'll start charging double. OOPS that is illegal in Florida. Real estate agents can only charge their "standard" fees for short sales.

Steven Jackson said:
Sure...I'm on board with the lender paying a 3rd party company...but I think agents are going to eventually have a problem requiring buyers of their listings to pay ANY of the sellers contractual obligations, even if it is on the HUD...but, I might be wrong!

And this reminds me of another similar issue...the liting broker charging the buyer a transaction fee...I am starting to see this a lot.

Alan Remigio said:
This is a common occurrence, more so than most believe. Many agents don't have the experience nor desire the tedious work needed to conduct a short sale successfully. Several broker friends of mine employ professional negotiation companies because they feel the agents best use of their time is to build their pipeline, not spend that marketing time to negotiate. Again, we come down to the issue of disclosure. All parties must understand what is going on here.
Please remember, the only advantage the seller has in the short sale process is the opportunity to shed debt and an event other than foreclosure appearing on their credit report. We are not cheating the seller by adjusting the sale price. Yes, there are cash incentives from the lenders and GSE's now, but the seller gets this when the sale goes through. So agents, your job is to close the deal, on both sides. Buyer should already get a discounted value, otherwise it isn't a short sale. Guess what? Lender is not opposed to the negotiation fee. I've seen as much as 4% plus paid out.
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!
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!

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