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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I LOve this Realtor's idea! Why not charge the Buyers? After all- when negotiating the short sales you really are doing a lot of work for the BUYERs. The only thing is, as a Lister-you are not representing the BUYERS (usually) so how can you charge the Buyer? Well- you put the price the Buyer is contributing to the Listing Brokerage on the HUD I suppose. Good Question and great idea! I will follow this discussion! Debra Savittieri

I agree with being compensated accordingly for the work, as many have also stated. We offer co-broke 2.5% and we keep 3.5%. We have had only ONE agent question this procedure. When I have a buyer client, I readily accept & will show/try to sell a home offering me 2.5% on a short sale, as I understand the work involved. However, if we see a listing that is charging my buyer directly a "negotiating fee" at close, we will not belooking at that home....

I wouldn't see a problem with this. As long as it's not an upfront charge, and it's all right above table right from the start with your buyer and they understand what they're paying for. You're providing a service to the buyer, you're charging what the market will bear. If the buyer takes a look at what they're getting, and overall it is a better deal than they can get elsewhere then it's still a win-win. If your charge changes the complexion of the deal enough that it no longer presents itself as such, then the buyer has other options and should use them. If the charge is affecting the numbers enough to prevent the deal, the market will tell you so and you'll need to always. My $2...only because I can't find a "cents" symbol. Everybody have a good day.

I think we should be paid a minimum of $35.00 an hour to handle a short sale by the bank(s)....As long as you have a proven track record of providing all documents correctly and in a timely fashion IE Equator task time periods etc....Even if it doesn't close!....I have too many experiences with B of A and 3rd party servicers that are inept....

I personally don't do this, but anything that buyers or sellers sign and date in writing is legal, my commsission is for the work I do. Some things such as this could go against the Agent or Broker as far as future business is concerned, but that's down to them, their consciounce and how much harder they like to work at getting new business when someone who doesn't charge this fee such as myself notice the clients come back to me and refer everyone they know and come across to me. There are enough fees already being charged for this. Each to his own, but yes is legal.

As long as it is disclosed in the RLA and/or RPA, it is disclosed on the HUD AND the Lender Approves the fee on the HUD, my understanding is that it is Legal. It is all about disclosure. Of course, the Buyer could try to Counter this out of the contract.

Helping my clients is my number one priority.  I may never be rich but at the end of the day I know that I have done the very best for my clients and I can rest easy.  Charging a buyer to handle the short sale is not ethical (at least to me).  I personally don't recommend that my buyers pay a fee to purchase a short sale so to me this is not the best marketing strategy for my sellers.  Buyers are hesitant to purchase short sales and wait months for an approval, charging a fee will really limit the buyer pool.  I don't care what other agents do, I am not doing it.  As far as being a "short sale expert", there are none.  We are all continuing to learn because short sales change daily.  I don't call myself an expert but that I am experienced in short sales.  I despise it when agents claim to be the "leading expert" in shorts sales for your area and then just hand it over to some assistant to take care.  I have had calls from sellers asking me to take over their short sale because the "leading expert" took the short sale and never called their client again.  Time to get off my soapbox. : )

Well said.  And I do not believe you're on a soapbox.  I believe you're just calling out the Agents that are greedy.  It's my humble opinion that Greed is what helped us get in this mess within the financial and real estate situation in our country.

Thanks Troy, when I feel strongly about something I do tend to go on and on.  I agree GREED is what got us here and now we need to deal with it.  I also believe in Karma and you always reap what you sow.

I have to say here in southwest Florida, when charging the buyer more money the listing is sitting on the market longer because there are a lot of agents and buyers that pass on even looking at the house. There are only a very few that do that and it is usually $1500 and the listing agent is calling it a bonus and do not submit any offers without that on the contract.  I have also seen some non short sale listings that the listing agent puts right in the description that the "owner of the property is requesting the buyer to pay the listing agent a $1500 bonus, and if it is not on the contract the contract will be rejected!!" It's crazy! The way I see it if the seller wants the listing agent to get a "bonus" then the seller should dig deeper in his pockets!

In Washington State it is illegal to charge a fee above the traditional Real Estate fee unless you are a licensed loan originator or an Attorney. In Oregon you must be a Debt Settlement Company and run under strict guidelines.

To the best of my knowledge I do not believe it's illegal.  I do however feel it's totally unethical.  The listing agent is simply trying to push a fee on to the buyer.  I've never done this and do not ever intend on doing this to a buyer.  If I've taken the Short Sale listing and I'm negotiating the short sale, or have hired a negotiator to negotiate the file, then I feel it's the Cost of Doing Business if I pay the negotiator.  It's no different then paying an assistant or TC to handle my flies.  Just my opinion!



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