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short sale negotiation fees

Friday, February 24, 2012 - Article by: Lender411 Member

How to structure Short Sale Negotiation fees:

Having acted as a third party short sale negotiator for listing agents over the last couple of years, most agents like my services, but many do not like the idea of having to pay me. Typically agents have tried to find solutions to help subsidize my fee etc. I have seen it structured many ways in which some I agree with and some I think may be a little shady. Here are a few examples.

Putting the short sale negotiation fee on the HUD1 as processing, transaction, short sale negotiation fee, etc

(Banks do not typically like to pay this)

Charging the buyer a % to negotiate the short sale.
(Fannie and Freddie allow this but some states like Ca do not really like the concept)

Listing agent getting a higher split than buyer's agent
(My opinion this is the best route to take)


Short sales present a special problem with conditional compensation being offered to a cooperating broker. The listing agent may not be entirely sure what the commission will be until the terms of a short sale negotiation are approved by the lender. The Multiple Listing Service (MLS) has adopted NAR-approved language giving participants in the MLS the ability to disclose or may require disclosure to other participants that there is a potential for a short sale. If the property is being listed as a short sale, that should be disclosed in the private agent remarks section. A listing that requires the buyer's agent to pay a portion of the negotiator's fee may be a prohibited contingent offer of compensation. To avoid an MLS Rule violation, rather than requiring the cooperating broker to pay a stated amount of the negotiator's fee, the listing agent may lower the percentage of the commission offered to the cooperating broker, subject to discussion with the seller and full written disclosure. The purpose of the MLS is to exchange information regarding available properties for sale or lease and to establish legal relationships with other participants by making blanket unilateral offers of compensation. The MLS Rules govern the behavior of the participants

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