I have seen agents charge Adm fees on their short sale listing or verbage similar to that. I just saw one stating "buyer will pay xyz realty an added commission of $495 at time of closing". Is this ethical or legal? There are a lot of questions out there in regards to agents charging these fees, they show 2.5% commissions so they are making up the rest with the buyer.

I just spoke to FAR legal dept (I'm in Florida) it's a violation of the Respa law. I thought so, so if I make lets see if they are willing to work with me or not.

Why do all the short sale scams start in Florida?

Many do not start here. They just get perfected here.

We had a rash of MLS listings from agents who have to pay a per transaction fee putting the commission as X% minus $YYY dollars.

This effectively shifted the fee from the listing agent to the selling agent. Our MLS does not allow this anymore and can fine and eventually ban an agent who does so.

I have to admit, Floridians are masters in this area.

It is the weather. We are a magnet for people who want to spend time on the beach.

Actually working a real job for a living cuts into their beach time.

If they spend the time, energy and creativity on something productive instead of scams they would probably make more money and have more beach time.

As long as it is on the HUD-1 it does not violate Respa

I lived in S.FL once and I remember even then it was very expensive to live there, BUT the pay was low b/c of something they called something like the "Sunshine" factor? That, if you live there you get the "benefits" of the beach and nice weather. Like you're LUCKY to have that, why ask for decent money, too? Wages were discounted for this "Sunshine Factor". So, I became a drug dealer to make ends meet!

Just kidding. Actually, I had to move or starve. But alcohol was really cheap-- is it still like that?

I lived in South Florida for 12 years. For a long time, the Ft. Lauderdale area was the "Home" of the scammers but many moved to Boca around the year 2000. These were mostly stock boiler room operations but there were plenty of other scams at the time.
Just the other day, there was an article in the Palm Beach Post about some guy that filed fraudulent quit claim deeds on vacant houses, then rented them out at less than market rates to gullible people. Most were in the same development that was featured in the reality series with Rob van Winkle (Vanilla Ice) where he fixed and flipped. When they were built around 2002 and 2003 they started at about a half million.

I think the fee has to be earned (some service has to be performed), it can't be tacked on because you want to increase your bottom line.

"Section 8: kickbacks, fee-splitting, unearned fees

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or anything of value ..... In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed."

It would be pretty hard to argue that a short sale negotiation wasn't earned if the escrow closed.

My issue(s) with this, are:

~These companies are not working for the the buyer. The buyer did not choose them/hire them. A buyer should never have to pay for a company/fee they have no control over.
~I would wouldn't swear to it in court, but would bet on it in Vegas that, these fees would not be allowed to be paid by a buyer on a VA or FHA loan. And how many of these loans are we seeing these days? Something like 30%?
~The way it's been worded in our MLS, the fees get pd by the buyer not as a commish, but as a negotiating fee to ABC short sale co for facilitating the "deal" or some such thing. Because only a licensed broker can earn a commish in Ohio.
~If an agent needs to hire a co to help get a short sale closed, THEY need to fork over the buck.

/off my soap box

I think that an agent that hires a short sale negotiator or charges some kind of fee, when it is charged to the buyer, is doing a great disservice to their seller.
The listing agent, via the listing agreement, is pledging to the seller to sell their property at the best price possible to a ready, willing and able buyer.
If a buyer balks at paying these "fees" and walks away from the transaction because of the additional fees, has the listing agent really provided the seller with the service that was contracted?

It does not violate section 8 of RESPA.... It's a line item on the HUD that discloses the service much like a legal fee, a transit fee, doc prep fee, etc..... The fee if minimal is no big deal

[quote=MountainBPO]It does not violate section 8 of RESPA.... It's a line item on the HUD that discloses the service much like a legal fee, a transit fee, doc prep fee, etc..... The fee if minimal is no big deal[/quote]

This was handled by HUD a few years back against RE/MAX franchisees who were adding fees to the HUD-1 saying the same thing...if it's on the HUD-1 it is legal. HUD stated that if you add a fee to the HUD-1 you must disclose the services that were provided and the parties must be given an opportunity to review and question it. I found this on Realtor.org:
http://www.realtor.org/rmodaily.nsf/0/c3d6746571c34365862576ef0051ca25?OpenDocument

I see a lot of the listing agents asking for money. Im not sure if they are really putting it towards the second or if they are just putting the money towards the negotiator fees.

I remember this big stink coming out. I, too, was surprized by the number of agents "charging" their seller or buyer an "admin fee". I thought "you lucky dogs!"

What I don't understand is how any gov't agency can "dictate" what our fees are. If YOUR buyer or seller know IN WRITING UPFRONT that they are going to pay a $450 admin. fee above any commission, I'm suspect it's legal to do so because it's IN WRITING. But a Listing Agent cannot "charge" a buyer a fee unless there was written consent.

My buyer's agreement - where it discusses Commissions - I added: "Commission would be at least x% of the sale price as paid by the cooperating listing broker. If commission is less than x% of sale price, Buyer(s) shall pay the difference, due and payable, at settlement to Broker.

I would not doubt I could add an admin fee also - but I think the key here is to disclose it IN WRITING and perhaps state what it is being charged for. I see alot of "storage" fees". Lenders must now disclose in writing what their charges are. Am I right or wrong in my thinking?

I agree and think you are right. Disclose, disclose, disclose! And if the buyer is the one paying, then make sure it's on the purchase contract, just as escrow and title fees are.

In a related topic, what does everyone think about the lsiting agent charging the seller's agent a kickback fee? I've tried getting a better understanding of this but with no success. The banks don't see the amount because the sales contract states the net dollar amount that each side will get.

Any $ amount paid by the agent to someone not authorized by the seller, is not legal. (where I am)

[quote=pikes peak]Any $ amount paid by the agent to someone not authorized by the seller, is not legal. (where I am) [/quote]

I agree but I can't seem to get any definitive answer from anyone. Basically, our MLS shows a compensation pay as "3% -$100" I've never been able to get a straight answer as to why I have to kick back $100. Has anyone else run into this? One MLS sees no problem with this and another does not allow it (both are privately run services).

Our MLS has specifically stated that it is not allowed. Any time I see it I report it to MLS.
Our company charges a $295 fee that is waved on REO listings and on Short Sale listings under $250K. If the seller does not pay it we do.

If you do 100 listings a year and charge the selling agent $250 on each one that is a healthy chuck of change per year. I can see where some agents are tempted but in our area it is not allowed though I am sure some hungry agents just pay it to get the deal done.

IMHO we must actively fight it or it will spread.

Even if not a violation of RESPA, it may be a violation of MARS.

"In Augenstein v. Coldwell Banker Real Estate LLC, decided on August 30, 2011"

Something to think about:
Trial Court Purports to Regulate Brokerage Compensation under RESPA

If an agents duty is to their sellers, then how can charging a negotiation fee to the buyer/buyers agent be conducive to that? That really limits the amount of buyers you will get, especially on lower end homes where the buyer may not have the extra money to pay the fee. Even if it is disclosed, it just doesn't seem right to me.

Someone has to pay the fee. Sometimes it's the listing agent, sometimes it's a 50/50 agent split and sometimes it the selling agent paying the fee out of the commission. To be honest, the banks usually knock down the commission to agents anyways, so the one party that benefits the most from the sale (the buyer) should be the one paying (IMHO).

If it's a low end deal, the buyers are usually doing something like an FHA loan and many banks will agree to some form of "closing costs assistance". Basically, the bank ended up paying the negotiation on many of our office deals.

This is very common in Las Vegas. Fees are not allowed to be charged by a licensed agent though. We must call it a commission. Commission is the only compensation we are legally allowed to receive, regardless of the charged item.

For California agents, please refer to DRE Winter 2011 Bulletin. On page 3, there is a article on the legality of the fees in California. This was in response to a letter my broker wrote to DRE requesting clarification.

Basically it states it is legal, as long as the negotiator is properly licensed in California and written disclosure has been made to all parties including all lenders. It must be on the appropriate lines on the HUD-1 statement and be for actual services performed.

For us, we include it in the listing agreement, it's disclosed in the MLS and we make it a part of the purchase contract through an addendum. It's also included in all HUD-1s by the title officers we use.

The fee is paid to a Broker who does not list and ONLY does negotiation. Listing agents do NOT get any part of it. This system allows agents to focus on prospecting, marketing and handling the transactions without being on the phone all the time with banks.

I don't charge any fees but I know of many agents who do. Some even charge a retainer fee that the client is required to pay even if the contract does not go to closing. As long as it is written into the contract and is on the HUD-1 at closing and is being paid to a licensed agent/broker, it does not violate RESPA.

I've seen one agent here charging a $2995.00 short sale fee with a 3% buyers commission on a sub $20,000 property. I dont know if it was a typo or not but I cant imagine presenting those terms to a buyer.

Sounds like you are talking about charging fees to your own client. Op is stating about the listing agent is charging these fees to the buyer that is being represented by another agent. I see it a lot too. When REO was hot, the compliance fees were being charged then. Now that short sales are the new thing, it's being charged on those. We talked about it in my brokers class, and the teacher said it is highly frowned upon, and borderline illegal. They were trying to make changes or something to not allow it. It's been over a year so my memory is a little foggy. I know of many agents who charge retainer fees to their buyers up front that are not refundable. If you have it in writing it is perfectly legal here.

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These fees that listing agent is charging to selling agent, are the fees that most of real estate companies are charging to their agents. In other words, there are a lot of agencies that doesn't charge a percentage of the commission, they charge a standard/flat fee, so this is the fee that they don't want to pay and they want the selling agent to pay it! totally ridiculous and I try to report those agents to the MLS and the Board!