Is it legal to request that the buyer pay the short sale processing fees?
We get asked this question … a lot! So, let’s attempt to clear up this issue:
First of all, this question is in direct response to a DRE article that was written in Sept. 2010, regarding Short Sale Fraud and in particular, the issue that some listing agents and/or short sale negotiators were requiring short sale negotiating fees to be paid by the buyers (as opposed to the seller). There was also the concern that this fee wasn’t being disclosed to the lender and was violating RESPA laws.
Unfortunately, many agents took this article to mean that you can NEVER ask the buyer to pay the SSN fee, when in fact they were overlooking two very important key words: require & disclose. To be sure to avoid this issue and stay compliant, you need to make sure:
- That all offers are presented to the seller, unless they waive this obligation.
- That it is the seller who is requiring the buyer to pay the short sale negotiating fee.
- That all fees are disclosed to all parties: seller, buyers, agents & lenders.
- Disclose, disclose, disclose.
As stated in CAR’s SSN guidelines: “Listing agents and sellers, however, may prefer to have the buyer to pay for the SSN fee. This is not illegal if done properly; however, it must be done very carefully.”
If you would like more information, we have copies of CAR’s SSN Guidelines. Please let us know if you would like a copy, especially when questioned about this by a buyer’s agent.