Charging the Buyer a Fee to Process the Short Sale Listing

My broker just came to me with a question and I didn't know the answer, so I'm looking for some guidance.  We have an agent in the office who is charging the BUYER of her short sale properties a flat fee at the closing to process the short sale.  This fee is disclosed in the contract as well as the HUD.  Is this OK?  Legally speaking?  Does anyone else do anything like this?


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It may depend on your state.  In Wisconsin we are not allowed to charge a fee for this service, save for the commission we make if we produce a ready, willing and able buyer.


I have a friend in Michigan, she did a SS with a local REALTOR in that state, and she was charged a flat fee for her service.

Its become an issue in CA where this practice originated. Agents are being audited and some have to turn in their license. 

There were 3-5 of us in Southern California that started this. Now it has grown widespread and I laugh when I see my disclosure being sent to me by another agent. The problem comes when the listing broker doesn't properly disclose the commissions the buyer is paying.

I have closed several short sales with AHMSI (American Home Mortgage Servicing, Inc.)  They issue their short sale approval letters with the stipulation that the Buyer pay a Short Sale Administration Fee of 1% at closing and it has to appear on the HUD.

same thing here, I have actually one closing next week with AHMSI with the 1%, I've had 2 others with them over the past year same thing.

How long before the approval or closing should a buyer see the preliminary HUD?  If it is submitted to the lender with the contract, shouldn't the buyer see it then also?  

I usually don't send the preliminary HUD out to the seller or the buyer, simply because it is a  work in progress. Numbers change throughout the short sale process, and the final product is often very different than the first one.

Buyers & sellers (and some realtors) are not aware of how to read these things, so the title company sends out the preliminary CLOSING HUD when the figures arrive just before the final bank approval.


In Colorado this is legal and I see it more and more.   It is disclosed in the notes of our metrolist and on the contract.  Most title companies that work with short sales do charge a fee and it is disclosed on the HUD.  If the bank does not pick it up then the buyer does and it is disclosed as such.   I have a short sale now that the bank won't pay the fee but the buyer has agreed to pay it.   Buyers usually get a great deal on the short sale and I have had no issues paying the fee at closing.     You could ask - why does the seller have to pay all the fees and commissions, especially when they are in trouble?

I have seen this more and more.  It is listed on the MLS that the buyer will pay the negotiation fee for the short sale from $1,500 to $5,000.  I have asked the MLS and was told that they can do that.  I don't understand how they can list a property for X and then add an additinal fee so the property really is: XX. 

When I set up a shjort sale I have a group of lawyers handle the negociations of the short sale. They get paid 1% of the commission. They usually get the lender to approved 6% so that leaves 5% forthe 2 agents to split. I think it is NOT fair to ask any buyer to pay for anything but the home.

Your a smart agent!

There are a lot of people who do it here in Michigan.  I can't see how it can be illegal.  You can ask buyers to pay for anything you want.  But in my opinion it is just down right stupidity.  Most buyers are scrapping together what they need to buy a house anyway.  I have beat out every other agent has went against me in a listing presentation with it.  It simply cuts the buying pool in half.


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