There have been many companies that charged upfront fees for negotiating a home that is a short sale. Some good and some that were scams. The Arizona Department of Real Estate (ADRE) has come up with new regulations to try to put a halt on the scams that have been occurring.
The new ADRE regulations are going into effect March 1, 2011. Per the department, a licensed real estate broker/salesperson representing a seller in a real estate transaction can negotiate a short sale with the lender provided that the broker/salesperson does not charge an additional fee for the service.
The Arizona Attorney General's office has opined that a real estate licensee may not receive additional compensation from any source (seller, buyer, lender or otherwise) for negotiating a short sale, unless the real estate licensee is also licensed as a loan originator by the AZ Department of Financial Institutions and the requirements of A.R.S. 32-2155(c) are met.
The following summarizes the ruling:
- A real estate broker/salesperson may not receive additional compensation for negotiating a short sale.
- A real estate broker/salesperson may not be compensated as a third-party short sale negotiator.
- A listing broker/salesperson may charge the seller a non-refundable retainer fee in a short sale transaction IF the listing broker/salesperson charges all sellers (traditional and short sale) a non-refundable retainer fee for listing and marketing the home to buyers.
- A third-party short sale negotiator must be licensed in Arizona to negotiate a short sale on behalf of an Arizona seller - They must have a loan originator license issued by the Arizona Financial Institutions.
- Any fee must be paid throughout the employing broker.
So what does a seller need to know?
- A Realtor can only get paid from the commission from the sale of the home.
- The commission is paid by the bank (your mortgage lender) from the proceeds of the sale.
- Nothing is coming out of the seller's pocket at close of escrow.
I believe that this will go along way to protect a seller from many of the scams that have been trying to take advantage of a seller that is already going through difficult times. It is unfortunate that there were people collecting thousands of dollars from the sellers upfront and not benefiting the seller in any way. Now, the true professionals can continue to do their jobs to help these sellers and the scammers will disappear!
There are many issues relating to short sales and a seller needs to be sure to consult with their attorney and tax accountant on their specific situation prior to starting the short sale process. And if you encounter someone that is asking for money upfront (other than possibly a small retainer fee which some Realtors do charge) then run!
If you have any questions regarding selling your home, please don't hesitate contact us! We can go through your situation and give you information that will help make your decision hopefully a little less difficult and help you move on to a new and brighter day!
Best Regards,
Brenda and Ron Cunningham
Recognized as one of the Top 50 Realtors in the Phoenix Business Journal (July 2010)
You can also check out our blog post "There is life after a foreclosure or short sale".
http://activerain.com/blogsview/2062929/there-is-life-after-a-foreclosure-or-short-sale-
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