John MacArthur wrote a post yesterday expressing his disapproval of a Real Estate Company in his area that charges Short Sale Sellers a fee in addition to the commission. John’s opinion is that this is taking advantage of people. I thought his opinion was way off base. But hey…..that’s just my opinion. Go read his post and form your own.
My question to John was “Is it the fee or the amount of the fee that has you riled?” I asked this question for two reasons.
1. If it’s the AMOUNT of the fee then I would consider his opinion a possible violation of Sherman Anti-Trust Laws.
2. I list short sales AND I charge an upfront fee to my sellers. It’s a very reasonable fee and they pay me prior to listing the property. I also charge a commission at time of closing.
For number one you can do your own homework.
Here is my explanation of number two.
I charge an upfront fee because Short Sales are riskier, more time consuming and contingent on the Seller and their Lender cooperating.
As any good businessman would I charge a small listing fee upfront to help offset my costs and risk. I am certainly not unethical and I am not taking advantage of people in a difficult situation. I am doing everything I can in my power to help them EXCEPT work for free.
Did you know I pay more for E&O insurance because I list Short Sales?
Did you know I NEVER reduce the amount of the co-broke if the lender reduces the commission? This is a benefit to my Sellers because Buyer Agents know they will get a FULL co-broke if they bring a Buyer for one of my Short Sale listings.
I closed on three Short Sales last week. All of my Sellers were very happy that I was able to help salvage some of their credit and get them out of a difficult situation.
I have only heard of one other broker that charges an upfront fee on Short Sales in my area. I tell my Sellers right upfront that MOST broker/agents will not charge a fee. They pay me anyway. Why? Because I build value. I bring a lot of knowledge and expertise to the table. I have 2 Sellers right now that are Attorneys and even have one who owns a C-21 brokerage.
A few months ago I had a Seller decide one week before closing that he would just let the house be foreclosed on. I had worked for five months on the deal. His Attorney advised him to do this so he would not have Federal tax issues. It was my Seller’s homesteaded property. He was exempt from Federal tax on the sale. His Attorney was wrong and probably just wanted to get the fee for filing bankruptcy. I had zero control over this outcome. I stared charging an upfront fee the very next day.
I refuse to have my compensation controlled by outside forces.
Below is what one of my recent Sellers had to say. What say you?
You are amazing! From the bottom of our hearts we want to thank you for this smooth transaction even from across the United States. We are all spread out – David in China, you in Florida, and I am here in California. Even with the distance this transaction did not skip a beat. You did everything on your end and we did whatever you told us to. Your hard work and dedication paid off! You even got us a better deal than what we expected – with the 2nd being forgiven. Your professionalism, patience, persistence, and follow through mentality kept this transaction out of foreclosure and made it into a smooth Short Sale. You are the King of Short Sales! Thank you again for all you did. We wish you and your family the best and keep up the good work.
Sara & David Fisk
DISCLAIMER: I am a Florida Licensed Real Estate Broker. This article is my opinion based on years of experience and the laws of my State. All Sellers are urged to seek competent legal and tax advice. I am NOT qualified to give advice in those areas.
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