1% Short Sale Admin Fee by Banks

I have been doing short sales for about 3 years now, but this is the first time I have recieved from a bank a short sale fee of 1% of the selling price payable by the buyer. Has anyone else seen this? Is anyone aware of a way around this fee? Seems like banks are really scraping the bottom here by charging the buyers. I'm really upset about this.

Edited: 06/26/2010 at 09:21AM

James Ward

Real Estate Investor · Ocala, Florida

748 posts
18 awards
55 influence

Aug 14 '09, 05:10 AM

Kathleen,

I have never heard of that. Would you mind coping the document and posting for all of us to see?

Thanks,
James

Edited: 06/26/2010 at 09:21AM

Kathleen Thomas

· Little Falls, New Jersey

6 posts
1 award
50 influence

Aug 14 '09, 06:17 AM

James - I can't post the document because it is written in the note from the negotiating agent and contains personal information about the seller. However, I will quote what it says:
"American Home Mortgage requires the purchaser to pay a short sale administration fee of 1% of the purchase price."

Edited: 06/26/2010 at 09:21AM

Justin S.

Rehabber · Chandler, Arizona

Donor Pro

1,257 posts
14 awards
68 influence

Aug 14 '09, 07:07 AM

I have a few shorts with AHM right now and they are being very difficult. They are not discounting anything and requiring that I pay for an appraisel if I think the BPO was over valued. I sent them numerous comps, some on the same street that state the BPO was overvalued and they do not care. It does not surprise me that they asking for a 1% fee. The lady on the phone this morning told me they are only accepting full price (to the BPO) offers.

Edited: 06/26/2010 at 09:21AM by Justin S.

Justin S., Wheelhouse Properties
E-Mail: wheelhouseproperties@gmail.com
Telephone: 4806780446
Website: http://www.wheelhouseproperties.com
Realtor, Re-modeler, Cash Buyer

Kathleen Thomas

· Little Falls, New Jersey

6 posts
1 award
50 influence

Aug 14 '09, 07:19 AM

I concur on the full price to the BPO. I'm having that problem with them now. Our property was over appraised. The appraiser was difficult to work with and would not even talk to me. Held up his hand and said, "please do not talk to me. I am not allowed". Wouldn't take a copy of the contract or the comps. Now they send an email with the 1% issue. Try getting that past a buyer!

Edited: 06/26/2010 at 09:21AM

Jodi Funke

Transactional Lender · Covington, Kentucky

18 posts
50 influence

Aug 22 '09, 12:51 PM

I just received the same thing from AHMS. I have been doing short sales for 3 years and this is the first time I have ever seen it. I requested it be removed, but no luck. I had received an acceptance letter from them just a few months ago on the same house and it wasn't included. So, this is a brand new issue.

Edited: 06/26/2010 at 09:27AM

Kathleen Thomas

· Little Falls, New Jersey

6 posts
1 award
50 influence

Aug 22 '09, 01:40 PM

I complained to the agent who answered the phone when I called AHMS and I was told that if the buyer was walking away because of the fee there was a chance that I could fight the fee. I would have to talk to a supervisor. Have not tried it yet because I am not at that point - still negotiating with the buyer. We shall see. I will keep you all posted. Please let me know if anyone else is successful in removing it.

Edited: 06/26/2010 at 09:27AM

Mitsu O'Riley

Real Estate Consultant · Savannah, Georgia

81 posts
1 award
50 influence

Aug 26 '09, 04:44 PM

If it is a Fannie deal, you can report it to them, and I would cc AHMSI on it.
Same with most of the other investors. Especially if there is MI.

They get $1000 for every deal they approve (and I guess close) from the government. All the lenders get it form the govt (the tax payer).

If it's in the approval letter, then I think the seller can totally sue for causing the short to fall apart. I think the going retainer for foreclosure attorneys is worth it if they fight you on this.
~m

Edited: 06/26/2010 at 09:30AM

Ted Akers

Private Money Lender · Denver, Colorado

601 posts
12 awards
58 influence

Dec 08 '09, 08:59 PM

Kathleen,
Changes last week by the US Treasury Department should preclude them from charging ANY fees to the homeowner. You can see details of several positive changes I posted at: http://www.biggerpockets.com/forums/103/topics/42310-short-sales-encouraged-by-treasury

Edited: 06/26/2010 at 10:46AM

Steve Babiak

Real Estate Investor · Audubon, Pennsylvania

4,266 posts
14 awards
91 influence

Dec 08 '09, 11:51 PM

Ted,

I think you mis-read the original post. It is the buyer / purchaser who is being charged this fee, not the seller / homeowner / troubled borrower.

Edited: 06/26/2010 at 10:46AM

Ted Akers

Private Money Lender · Denver, Colorado

601 posts
12 awards
58 influence

Dec 13 '09, 10:28 AM

Steve,
Sorry, yes I did misread it. As REO inventory builds maybe these guys and others like BofA will get a clue. Fees may make them feel better about their deal, but it will still boil down to a net price to the buyer.

Edited: 06/26/2010 at 10:50AM

Felix Liusky

Real Estate Investor · Los Angeles, California

12 posts
2 awards
50 influence

Dec 13 '09, 10:52 AM

Yes. No BoA, CW, Wellsfargo and AHMS (dead on arrival). You will do just fine and will put food on the table for those who do shortsale double close. Doing doulbe close/simu close with LandTrust. No problems since 2007 till yesterday. No Seasoning Problem. - Felix - former Bank Vice President

Edited: 06/26/2010 at 10:50AM by Administrator : SOLICITATION REMOVED - Post offers in Dealmaking Forum, Please.

Chad Pendleton

1 post
50 influence

Nov 11 '10, 11:08 PM

i know this was a while back for you....but i am now having trouble with being charged a 1% fee as a buyer. did you ever get the problem resolved??? what if i just refuse at closing, what can they do then? doesnt make sense to charge 1%...that means the more expensive the house the more the fee. just doesnt make sense.

Kathleen Thomas

· Little Falls, New Jersey

6 posts
1 award
50 influence

Nov 11 '10, 11:44 PM

In the transaction I was talking about - the buyer actually did pay the 1%. I tried to argue with the bank about it, but I didn't fight too much because the buyer was willing to pay and I wanted to get it closed. However, I was told on the QT by a rep from the company that if you refuse to pay it, they will evenutally back down. But it might have to be resubmitted as a new file again. That delays the process and with the falling market - the value will be even less the next time around so you might want to put in an even lower offer! That was the only file I had with the admin fee out of the hundreds we have done.

Jackie Patterson

Real Estate Investor · Kalamazoo, Michigan

666 posts
8 awards
50 influence

Nov 12 '10, 01:17 AM

We closed one with AHSMI a month ago. The approval letter had a section saying that......"If a short sale administration fee is applicable then the lesser of $5000 or 1% of the total sales price must be paid at or prior to closing." They checked a box saying this was not applicable, but checked another that it was applicable in the amount of $1100. (More than 1%). We just paid it. There was a good spread, and it wasn't worth the time to argue about it.

Scott Hubbard

Rehabber · Tucson, Arizona

1,031 posts
11 awards
57 influence

Nov 13 '10, 05:06 AM

I have 100% of the time been able to argue the removal of the 1% or 1K fee. However, it helps to be a third party por at least apprear to one.

Kathleen Thomas

· Little Falls, New Jersey

6 posts
1 award
50 influence

Nov 13 '10, 05:49 AM

Scott - if you don't mind sharing, how do you go about getting them to remove it? What kind of argument do you use?