Hat tip to the reader who sent in this official warning notice from the Commissioner of the DRE regarding buyers being forced to pay the listing agent’s short-sale negotiator.
An excerpt:
Unfortunately, Short Sale fraud is growing, and it too often seems that licensees and those counseling licensees may wrongly conclude that unlawful or questionable practices “cannot be bad” because “everyone is doing it.” Licensees must understand that fraudulent and unlawful practices will invite disciplinary action by the DRE an possible civil and criminal liability.
This DRE Short Sales update is written on the growing, questionable, and sometimes unlawful practice of short sale negotiators (“SSN”) requiring Buyers to pay the SSN’s fee.
It also mentions that a SS negotiator must be a licensed broker, which many are not. Click below:
CA DRE Short_Sale_Negotiator_Alert[1]
The Commissioner mentions all the types of fraud in this letter to lenders below – let’s hope he can do something to stop it!
Jim,
Didn’t BOTH of the houses you put offers on for me ask for a Short Sale Negotiators fee?
Yes.
I’d say this happens on at least half, and probably 2 out of 3 short sales that the listing agent requires the buyer to pay a 1% or more fee to their negotiator, or your offer doesn’t get presented.
The commissioner can stomp his feet all he wants, but it isn’t going to change until he sends mandates to every broker in the state. Agents just go along with it because THERE IS NO LEADERSHIP to tell them otherwise. Kind of like with the Chargers, at crunch time it’s a ship afloat.
Thanks,Jim. I forwarded these to my broker.
I am buying a short sale property and the SSN is aking for 1,900.00 is this legal
I am buy a property short sale. The SSN is asking for 1,900 is this right/leagal
It may be legal, but it sure ain’t right.
If the agents can’t process their own short sale, then make them pay the fee – it’s them who benefit.
Sorry Jim, you have it wrong. Who benefits? I earn a paycheck. The buyer gets a house. As a listing agent I charge 6%. The buyers agent takes half of that. I pay my assistant & my brokerage. Negotiating with illiterate morons on another continent is specialized work, and it is not easy or cheap. Without it, most short sales fail, and MY client loses a home. Why do you believe I should pay $1500 – $2500 when I am not on title, nor am I buying a home? It is a charge that has to be paid by someone. Maybe you are so well paid that you are eager to absorb that fee, but not me. It is legal to insist a buyer pays that fee, no different than an appraisal. They will not get the home without paying for both. There are no clear cut guidelines to address this issue, and it is a rather large amount to absorb. Until I am told otherwise, buyer pays it.