Have you seen statements like “short sale fee paid by buyer upfront” while perusing real estate listings? I have. I don’t like them. This “fee” smacks of an illegal practice. Is it illegal? I don’t know.
I saw a lot of this during the last major cycle of short sales and I had thought that this type of “fee” had largely been forgotten but there is a relatively new real estate broker based in Brockton who is using this old tactic to generate fees for… For who?! For the real estate broker’s office and its agents? For a third-party like an attorney or a lead generation company? I don’t know and I don’t care. I do know that I try to steer my buyers away from the listings of any real estate brokers who use this tactic.
This tactic can be abused. Imagine if I were the listing agent who used this tactic. What precludes me, as the listing agent, from collecting multiple $5,000 fees paid upfront that are non-negotiable and non-refundable? The tactic reminds me of professional poker players who collect multiple entry fees or portions of entry fees from unsuspecting “investors“. And what would that poker player do? That poker player would intentionally lose so he could keep the entry fees and without having to pay off his “investors“. And the “investors” would be none the wiser.
And what about the sellers? Doesn’t this tactic make the purchase and sale of these short sale properties more difficult to consummate? Doesn’t this tactic cause the sellers into an even more precarious position?
My advice? Stay away. Say “no“! Find another real estate opportunity.