Hello I'm near the finish line to closing on a short sale, it's been rough but I'm almost there! One issue I'd like to discuss is this. In the beginning I was never aware of the terms that came with the sale not once was it disclosed to me that I would have to be paying the negotiator fee. So when my agent asked me to give a deposit to a certain guy, I said well wait what is this for? he had told me it went towards my final payment. Later down the months I come to realize that it wasn't he himself told me that the thousand dollars is a separate fee that "all short sale transaction have to pay" I've been doing my research and realized that this is not true and this fee can pretty much be thrown around anywhere. The agent is a friend of mine he had just got started out and coming to this forum I realized that was a HUGE mistake. So i guess my question is should I just eat the cost for the agents mistake? Or is there something I can fight this with because I was misinformed. I believe it is up to the agent to disclose all terms and fees about the property before I even step foot in the condo. This was never done. I'd really appreciate everyone's opinions on how to handle this situation, thank you.

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HI Gabe-

Great Question! Many agents today are using short sale negotiators to help with the processing. This is usually a charge that is considered a closing cost. So technically the money that you paid would go towards your final closing costs in escrow. You can always tell your agent that you don't want to pay anything out of pocket or out of escrow and you want everything to go through escrow. That way, you would have proper receipts. However it was disclosed to you that you would be paying for this cost because you signed a contract stating it. I would also ask your agent for a copy of the MLS listing of the condo. In there the listing agent should have disclosed that the third party negotiator would be used and who would be paying for it. So sorry that this wasn't disclosed to you properly but yes it's a pretty common fee these days and not out of the ordinary. In my area (Northern California) most agents are paying the fees not the buyers. Congrats on your new Condo!

I overlooked what I was signing in this area, which I will admit it was my mistake but tecknically it wasnt disclosed. proving that point I was asking through out the whole trasaction what it really was for, only to get "oh its a typical fee". Well in my opinion it seems like some agents are getting lazy, if you cant handle a short sale yourself dont sell short sales or tell the buyer you will not be handling it and in turn hire someone for them. it is up to them to agree or not to pay for it, which I could not see a lot of people agreeing to that, "hey I dont want to handle this file so I'm going to hire someone to help me make my commission and you have to hire them for me and pay, thanks". this is what my situation looked like. But Like I've said many time before, I made the mistake signing and they made the mistake of not disclosing this to me properly. it was a mess but I'm glad I finally have the keys

Thanks for the reference to Quicken v. Freeman.  Personally, I find court rulings to be a great source for education, although I do defer to experts on such technical and involved matters.

Quick quote from the Appellate Court Ruling, admittedly taken out of context:

By its terms, RESPA does not regulate economic outcomes; it only bans certain predatory
methods. Congress did not mean to criminalize the charging of fees for
settlement services, however they are characterized, as long as they are
disclosed and not within RESPA § 8(a) or (b).

Because the statutory text is clear, RESPA prohibits only kickbacks and
referral fees, not unearned fees by a sole provider of settlement services. The
charges imposed by Quicken on Appellants for loan discount fees and a loan
processing fee are not prohibited by RESPA § 8(b).


The judgment of the district court is AFFIRMED.

 

The quotes you've provided are from the US Appeals Court, 5th Circuit (New Orleans area).  This ruling is contrary to all other DCA rulings; that's why the USSC had agreed to hear the case.  Florida is located in the 11th Circuit and is controlled by Busby vs. Realty South which ruling is similar throughout the USA except the 5th Circuit. Also, HUD issued a letter that affirms Busby.

http://www.ca11.uscourts.gov/opinions/ops/200615308.pdf

http://rismedia.com/2010-04-14/hud-guidance-on-compliant-commission...

http://portal.hud.gov/hudportal/documents/huddoc?id=respa-discfees.pdf

Thanks for these references, again scanned quickly, but clearly worthy of a careful read.

One deals with the charging of a administrative fee by the broker, the HUD letter deals with the handling of commissions in Section 700.  Do these directly relate to the discussion at hand for payment of the handling of a short sale, freely contracted for, with valuable service delivered successfully and resulting in an outcome of mutual benefit to all parties?

They actually seem, on quick read, to be supportive of the process that Todd follows, as we do too.  These seem to provide a basis for charging such fees, when they are for services rendered and not duplicative, whether by the listing agent or other party.

So, I hope we have put the rest today the idea that such involved and complicated matters can be resolved easily by quick references to the statutes.

I agree that most of the time it is a seller fee or a seller's agent fee.  Like you said, why take a short sale listing if you have to hire out the skills needed to consummate the transaction.  It should have been explained to you by your friend to the point where you understood it as a negotiation fee.

However, keep in mind, Gabe, that it can be very hard to get offers accepted here in California.  Your agreement to pay that fee might have been a huge factor.   That 1000 that you paid may have been the tipping factor to get your offer accepted above any others and put you at the top of the heap.  

As real estate professionals... we know that 1000 or 10,000 can be very small percentages of a purchase price.  None of us are trying to be cavalier about 1000 dollars... but I encourage you to keep it in perspective... it's 1% of the purchase price and you got a lovely home.  A counter offer could easily have been many times more than 1000 dollars.

understand but would you personally be happy to buy something to later find out that your paying a a little bit extra than you needed to? I have the keys Im happy, justice just had to be met

Depends on the circumstance in each transaction. I was not aware that you had closed and honestly didn't know your postion, seller, buyer, Broker etc. I can really say depends on the amount but at the end of the day no foreclosure!  @Meli Van Natta "ditto" exactly what I was trying to convey about the HUD. @Johnna Devon I agree totally. Someone dropped the bomb! smh

I've experienced this before with AHS, she did tell me initially and my response was that I was not agreeing to pay that fee and they should deduct from proceeds of the sale in my opinion so to offset the amount just add to the price, hate to tell you but it will cause a commission dispute if you don't and who suffers? For the sake of the client, seller, do what you can so they don't end up in foreclosure over a short sale fee. Now I've heard of Lenders forcing this on Brokers at 24th hour & at times, it's undisclosed. Now if that happens, it should not be charged especially if not on approved HUD. Usually listing Broker is informed in some way or another or it is on the approval letter but if Listing Broker is trying to get you to pay as Selling Broker, put on your negotiation hat! I would ask seller if able to make a contribution and ask other Broker what can they contribute to save the deal, but that should be on contract, all in all, do what is right and necessary to get deal done.

deal is done, I have the keys, escrow closed. done is done

It sounds to me as if there is a lot of confusion in terms, but what it comes down to is that YOU are responsible to understand what you're signing, but your AGENT is responsible to explain it to you.  It might be a good move to ask for a meeting with the agent, the broker, and the escrow agent so you know what costs you're responsible for, where the money went that you already paid, and that ALL costs are going to be detailed in the HUD-1 or Closing Statement for disclosure and tax purposes.

 

This is exactly why I am totally against "third party" negotiators. If your agent did not tell you he/she was hiring a negotiator then that agent should pay the fee. If the agent did not disclose to you , in writing, he/she was hiring someone to negotiate the short sale for you, then tell them to eat the fee.If you signed a separate contract with the third party negotiator, then I think you should pay the fee.

Question.. If I came over and cut your grass....without asking you. ..even though it might be two feet tall and really need to be done..then knocked on your door and said pay me..what would you say?

I assume you would have a few choice words for me, kick me off your property and go back to doing what oyu were doing before I disturbed you.

DO THE SAME THING to this real estate agent.   

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