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October 6, 2010

Lender-Imposed Fees on Short Sale Buyers Not Cool With DRE

You can always count on lots of fun when you’re a buyer in a short sale. The latest consumer alert from the Department of Real Estate (DRE) warns of the “growing, questionable and sometimes unlawful practice” of short sale negotiators requiring buyers to pay the negotiator’s fee in a transaction.

The buyer agent is sometimes informed by the listing agent or negotiator that buyers must sign an addendum in which the buyers agree to pay the negotiator fee if they intend to present an offer—and that their offer won’t be presented to the lender if that addendum isn’t signed. If this requirement is coming from the listing agent or negotiator (and not the seller), there’s potentially an ethics violation and a breach of the listing agent’s fiduciary duty due to the seller.

If you’re a buyer who receives this fee mandate, ask your agent to report the activity to his/her managing broker, who can then ultimately report the lender and/or listing agent to the DRE. The more frequently such activity is reported, the more likely this sort of fraud will decrease.

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