Sellers negotiator fee

Hi
We are a buyer and we found out sellers listing agent outsourced the negotiation to a third party. What's the typical fee these third party negotiators charge?

Thanks in advance

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Permalink Reply by Bryant Tutas on January 2, 2012 at 1:06am

It varies quite a bit. But usually 1% of the purchase price is average.

Permalink Reply by Minna Reid on January 2, 2012 at 4:23am

Here in CT it is capped at $500 and can only be done by a licensed debt negotiator.

This should not be a fee that falls on you either way.

Permalink Reply by Smitty on January 2, 2012 at 8:59am

James, so long as it was disclosed up front before you signed a purchase contract, then it's perfectly acceptable to have a buyer pay a fee.  If the seller or agent is trying to pass this fee along AFTER the fact, then I would have an issue with it.  Make sure it was clearly disclosed, i.e., in the listing or before you signed the purchase contract.  As Bryant said, I've seen fees anywhere from $3500-$5000 or 1% of the purchase price.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on January 3, 2012 at 4:59am

As others have said, the fee is always negotiable just liek commissions, settlement services, etc.

Here's a twist - If the BUYER is paying the Negotiator Fee, why wouldn't the Negotiator be then working for the BUYER.  Also, in California (example) an "Agency Disclosure" is required to be signed between the party paying the fee and the Licensed Negotiator.

Permalink Reply by Richard on January 7, 2012 at 6:46am

I agree with you 150%. It's the business principle behind it and it's also fair.

Permalink Reply by Shannon Blankenship on January 3, 2012 at 12:25pm

I'm not sure what state you are in, but I own a negotiations company. Our charge varies with the investor, and our agents we work with and the relationship we have with them, and how many loans they are giving to us. BUT, 1% of the purchase price is usual and customary because most banks have to reduce the listing agents commissions and can only do it by percentage due tot he program they are using instead of by dollars. Any way, this should NOT affect the buyer unless the buyer wants to use a 3rd party maybe because they are more comfortable with having one person, one office handling all their short sales, etc...or by trust and references. Anyone can pay the third party fee as long as it is disclosed. The third party also doesn't have to get paid on the HUD, but we like to get paid on the HUD to guarantee payment. Otherwise, we have to depend on the agent/buyer/whomever to pay after closing or pay portion upfront and pay the rest at closing. This is just informational, however if you are the buyer, and the listing agent is getting help that is fine, but it isn't your fee to pay. It is the listing agents fee unless otherwise agreed upon while signing the purchase contract. Hope that helps!

Permalink Reply by Sam on January 6, 2012 at 9:56am

I struggle to understand why it is that so many agents get stuck on the issue of the buyer paying for a negotiation fee.  Everything is negotiable, if the seller decides they will accept an offer, if and only if the buyer agrees to pay for a negotiator, then the buyer has the right to say yes or no...it is that simple.  Short Sales are not like normal sales, if a buyer (or their short sighted agent) right out of the gate rejects this premis, then they are probably not a good buyer to take to the finish line on a short sale anyway.  Many times the buyers are asked to pay for additional funds to junior lien holders, and other settlement items that sometimes banks will not allow from sales proceeds on a short sale.  If you do not work with a flexible buyer, who understands they are getting a good deal, but must be flexible to make the good deal happen, then don't bother bother working with them.

Why is it that a buyer can ask a seller to pay for traditional buyer closing costs and build it into the purchase price, and the seller cannot ask the buyer to do the same?  If the seller agrees to pay for the buyers loan origination fee, does that mean the buyers lender is working for the seller?  NO....it does not, it means the buyer and seller negotiated who was paying for what.  Any agent that is this short sighted in our ever changing market, is not doing their clients any service.

Permalink Reply by Smitty on January 7, 2012 at 7:02am

I could not have said this better myself.  In many situations where a property is distressed, whether REO,  or short sale, the seller mandates certain things that are traditionally their responsibility to be paid by the buyer.  I see this all the time.  Fees like, certificate of occupancy, smoke certificate, sewer inspections, etc., all written into the listing as the responsibility of the buyer.  It really falls in to the buyer's lap whether or not they want to pay for that or not.  There are NO shortage of houses on the market.

Also, I read Minna's post above and in the state of CT the SELLER negotiator fees are capped at $500, however, if you speak to the state, the buyer or agents, or whomever can pay above and beyond that fee.  I think with the intro of MARS FTC rulings, homeowners were getting scammed, and the state wanted to prevent predatory negotiators. 

Permalink Reply by Minna Reid on January 9, 2012 at 4:06am

Let me clarify - in CT if someone who is not a lawyer or an RE agent for one of the parties is negotiating the short sale, they MUST hold a CT debt negotiation license, and they CANNOT collect more than $500 (yes from the seller). If a buyer wants to pay a negotiator more, I guess they can, however it sounded to me from the OP's post that this was after the fact. If a buyer was expected to pay for negotiations ( which I find ridiculuous anyway, for many reasons)...then at least this needs to be disclosed up front.

Permalink Reply by Bryant Tutas on January 8, 2012 at 1:44am

Going out in the newsletter today

Permalink Reply by Stephen B. McWilliam on January 8, 2012 at 2:32am
Actually, in the instance a Buyer is obtaining a federally insured mortgage such a charge would be a violation of RESPA Section 8. The Buyer cannot be charged a fee for which they didn't receive any services a/k/a unearned fees. The Buyer may provide a HUD-1 page 1 side credit to Seller provided the Short Sale Lender doesn't object, which they may. Contrary to arguments by those that have charged these fees the Buyer does not receive the benefit of such services; only the Seller receives a benefit.

In Florida as in most states due to the SAFE Act such fees may only be charged by those licenses as a mortgage loan originator. Attorneys are processing and collecting fees only from the Seller side and in full representation of the Seller so as to avoid or settle litigation expenses.

Title companies are also not exempt. They like real estate licensees are permitted to process the short sale payoff but only charge the normal and customary fees.

Violations of RESPA provide for triple damages and fees. It is not uncommon for class action liability if the violator have done enough transactions and if they're financially viable.

Cash transaction? The Buyer may pay a fee but to only those appropriately licensed as per the SAFE Act.
Permalink Reply by Paul Antonelli on January 8, 2012 at 3:17am

Steve great post but I do have a comment.

There are attorney companies doing short sales and charging the buyers with full disclosure. They believe this is a correct practice. Because they sign and agree to it. However the Florida Office of Financial Regulation says something very different. 

Also, over a year ago Title Companies are not allowed to process short sales. 

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