Moriah, to my knowledge no state has laws stating buyers shouldn't pay for negotiation fees. It is more and more common to see listings now with buyers paying the negotiation fee. To quote someone on this thread whom I fully respect:
"As long as it is disclosed to the buyer, and they understand and agree, what is the problem. Any REO contract and disclosure makes the buyer pay for all fees and costs, why are short sales any different? In fact, I do not think sellers should pay any fees at all. As far as figures "hidden" in RESPA, why even have a RESPA? The law is clear, if it is disclosed on RESPA, then it is disclosed to all parties. Period. The sellers lender carefully inspects and must approve of all RESPA terms before funding. They know exactly what they are paying, and their guidelines clearly state that short sale fees be paid by the buyer. Their guidelines also state that seller credits of 3%-6% are REASONABLE AND CUSTOMARY. The argument that by approving sales credit defrauds the bank from receiving a higher net price holds no water. This indicates a lack of understanding of how lenders/investors work. Each lender/investor have different guidelines on what % of the purchase price that seller costs, including credits, are acceptable. As long as those fees and costs fall below this amount, they are approved. So long as you do not charge seller fees and costs that are higher than reasonable and customary, you should not have a problem. This is why you do not see attorney's fees of more than 5,000 approved, you do not see commissions of more than 7%, and you do not see exorbitant title fees. Once a lender receives a HUD, as long as total costs fall under their % guidelines, they are approved, regardless of whether you think that the lender is getting less net. They understand and accept this."
I am seeing most short sale underlying lenders here in the Pacific Northwest accepting 88% of apprasied value. That is well under current market value.
Moriah, the lenders I've worked with will take anywhere from 8 up to 20% off market value. I'm working on one with AHMSI that they are taking 27% off the appraised value so in my experience banks WANT market value but take much less, which is likely why we can get a negotiation fee easily. A short sale is about getting a short sale approved with ~ fingers crossed ~ a deficiency release...it's NOT about getting the bank the market value. If you get the sale done and it's under market value, you've accomplished something.
It's likely a buyer won't agree to fees if they don't know about them. Good third party negotiators disclose their fee right in the listing. You can't spring a $1500 fee on someone after the transaction has started. Keep in mind there are many lawyers as 3rd party negotiators too and that's exactly what they do...disclose that fee up front. It's up to the buyer if they want to pursue the property or not and what it's worth to them.
Also, short sales are distressed sales, so they are LIQUIDATED value...not fair market value. I GET that banks WANT fair market value, but it's not the same thing. This blog describes it perfectly. http://californiashortsalelawyer.com/2010/10/be-liable-for-the-impo...
Thank you Joseph - I appreciate your comment also.
Thank you Smitty for your reply - I feel much better and will check out this blog.