Archive for December, 2009

SHORT SALE – A WARNING ABOUT HIGH-COST THIRD PARTY NEGOTIATION FEES

Sellers who are thinking of selling their homes short should be careful who they pick to negotiate with the lender on their behalf.

Here’s the reason why: I recently represented a buyer who got under contract with a home that was marketed as a short sale. The seller hired a Realtor who hired a third party negotiator to negotiate on behalf of the Realtor and the seller. The third party negotiator boasted of short sale success and so on, but charged an extravagant fee of $4,000 to negotiate the short sale on a low cost $60,000 condominium.

What happens when the seller hires a negotiator that charges an exorbitant fee? Somebody has to pay the $4,000 negotiator’s fees on top of the commission, title fees, taxes, HOA, buyer’s closing cost and so on. If the seller’s lender does not approve of the extra fee (which normally happens), most likely the buyer or seller ends up paying it. In this case, my buyer was asked to pay $930 toward the negotiation fee. It is absolutely wrong for my buyer to pay such a cost. The seller hired the extra negotiator, not the buyer, so the seller should pay the cost. My buyer’s closing cost assistance was also narrowed from 4 percent to 2 percent to accommodate the negotiator’s fees. Whose interest is the negotiator looking after – the seller avoiding foreclosure or his own?

End of the story: My buyer and I walked away infuriated about the negotiator fees and reduced closing cost assistance. This shows what could have been an easy approval that would prevent the seller from foreclosure can quickly turn into a denial. These actions by some Realtors and so-called professional third party negotiators has to stop! These negotiators are putting their interests first, not their clients’. This is contrary to the National Association of Realtors (NAR) code of ethics.

If you come across people who do business like this, you can get a copy of the HUD statement from the title company to find out how the expenses are presented to the seller’s lender and compare with other short sale HUDs.

I have used the services of a third party negotiator before — at minimal cost — but found them to be unreliable. I found it best to do my own short sales so I have control of the transaction for my client and am able to communicate every update and not charge additional fees that could hurt the NET PROFIT of the seller’s lender. I am accountable to my seller regarding the outcome of the short sale. Since using the third party negotiator that one time, I have successfully closed every short sale transaction that I took on. I am happy to know that my tenacity has helped my clients avoid foreclosure.

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December 31, 2009 at 12:23 pm Leave a comment


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