by Bill McBride on 2/04/2010 07:42:00 PM
Thursday, February 04, 2010
Short sales are a hot topic, and Jillayne Schlicke has an interesting post: Predatory Short Sale Negotiators
I received a call the other day from a consumer who was in the process of purchasing a short sale home. The homeowner has defaulted on her mortgage and the trustee sale auction has been postponed a few times now that this buyer’s firm offer has finally reached the lender’s loss mitigation decision-maker. Once the offer was accepted by the seller, the homebuyer was surprised to learn that there’s a third party involved, a “Short Sale Negotiator” who is charging an additional $9,000 fee on top of the real estate commissions paid to both the agent for the seller and the agent for the buyer. The Short Sale Negotiator is demanding that the homebuyer sign an agreement that the homebuyer will be responsible for paying the $9,000 fee. The homebuyer emailed me asking what I thought of this additional fee and could I offer some advice.Jillayne walks us through the details of this deal and the regulations regarding a "short sales negotiator", as an example, in Washington, the "negotiator" has to be a "licensed real estate agent ... a licensed loan originator or otherwise exempt from licensing such as an attorney".
There is value to the buyer in having someone with experience negotiate with the banks. If the listing and selling agents don't have the necessary experience and contacts, using another agent (or lawyer) to negotiate the deal makes sense. However I'd suggest the agents pay for the "negotiator" since negotiating the deal is usually part of the agent's responsibilities.
If the agents won't pay, Jillayne suggests: "Ask for the negotiator’s [fee] to be put on the HUD I Settlement Statement as a seller’s closing cost. There’s a chance the lender will pay it." If not, the buyer has to decide if the house is worth the additional fee. But one thing is clear - no fee should be paid outside of the settlement statement so that all parties are aware of all the details.
Posted by Bill McBride on 2/04/2010 07:42:00 PM