During a recent transaction I was told by an in house sales representative that if my buyer wanted to add in closing cost to the purchase price that there would be a 20% charge for the closing cost, i.e. $6000 added to purchase price would be an additional $1200 so the total added would be $7200. I was really thrown back, right away asking why this charge was being imposed on my buyer. Her answer to me was, she couldn't really explain it, but as her supervisor had told her when she asked what the charge was for, no one gets money for free. This really made me angry, mainly because adding closing cost to the top does not affect the seller or the bottom line and p.s. the buyer is not borrowing money from the seller, so what's this about free money.
I then asked for her supervisors number as I'd like him to explain to me why this 20% charge was being implemented. It took me until the next day to finally get him on the phone and he informed me that due too the fact that the buyer was not using the preferred lender they'd be charged for adding closing cost to the top. But if they indeed wanted to switch lenders they could add closing cost in and the builder would pay several thousand toward the home buyers closing cost, yet the additional 20% would not be charged. He also told me that a buyer can not go to the bank and get money for free, so why should they be allowed to do so here. I went on to say to him that what you are doing is penalizing the home buyer for not using your preferred lender, who by the way is owned by the builder company, this is not acceptable. So to make a long story short, he waived this 20% fee, and I did speak to several lenders to verify my feeling that this was in fact a RESPA violation.