Short Sales-Brokerage/Attorney's fees rejected

I've run into this now twice already this year.  I am working as a buyer's agent on acquiring a Short Sale property through Bank of America (B.O.A.).  After the deal had been fully negotiated and the preliminary HUD statement approved along with the appropriate fees documented, B.O.A. changed their opinion on numerous fees on the HUD.  

They dictated that a brokerage fee that our firm charges with each transaction be removed.  This fee is paid by the buyer and the buyer had agreed to pay it.  Furthermore, B.O.A. also said that the fees associated with preparing the seller's documents for closing be removed from the HUD.  These fees were already agreed on by B.O.A.

There are two issues here.  1) B.O.A. is changing what is acceptable on the HUD statement as the transaction progresses through the system.  And 2) Why would they get involved in what the buyer agrees to pay?  This is in regard to our brokerage fee.  The fee has no consequence to B.O.A. or the seller.

I've considered contesting it, but every time that we ask any question at all with B.O.A., response time is lengthy.  Anyone else seen this?
  • February 21 2012 - Williamsburg
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Answers (11)

Best Answer

I don't believe the two responses adequately answered the OP question.

The OP wasn't asking whether the broker admin fee was ethical. In fact the agent has no control over this fee as it is a fee imposed by the broker / parent company.

I am baffled as to why B of A cares about a buyer paid fee as they're not paying the fee. And to dictate that items be removed from the HUD-1 (in essence attempting to bury those fees) seems unethical. But we ARE talking about B of A (note that I loath and despise B of A due to my own professional dealings with them).

What does your title company say about this issue and how could they address it with B of A's title provider?
  • February 21 2012
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Profile picture for mgannon12
I have seen this situation in a few of my short sales, both for transaction fee and attorney's fees.  The reasons could be the following:

1 -  Transaction fee - The investor (not BOA) probably does not accept any amount of money going to the brokers that exceeds the total of 6%.  Therefore, they consider the transaction fee as additional commission and they will not accept it. It does not matter if it is the buyer who is paying. In this case, you might have your buyer agree to pay to the broker outside the closing.

2 - Attorney's fees - BOA will not allow attorney's fees if there are Settlement fees from the title company.  It is one or the other.  I had this situation several times. 

I hope it helped!
  • October 10 2012
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Perhaps the sellers and buyers transaction costs were considered excessive per guidelines of FNMA or FMAC?

They will not agree to pay excessive fees which would reduce their net


  • October 10 2012
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Profile picture for Emma Ellis
Have you tried using Twitter? May sound odd, but I have heard of agents in difficult situations making a civil 'tweet' including BOA in it, and they have come to a reasonable conclusion. 
  • October 10 2012
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This is a great topic. Thanks for the helpful post Mike. I've had this similar occurrence with BoA short sales, i.e. last minute slashes to HUD expenses to attempt to cut some of their losses. It sounds like you have a decision to make about extending the timeline of BoA's final HUD approval in order to get what you've earned.

Even though it may be off the topic, on smaller transactions I charge most of my investor buyer clients and some of my non-investor buyer clients fees for my expertise and services. What kind of real estate professional would I be, if I didn't expect a minimum compensation for my work?

My clients are free to choose any agent they wish, but they keep coming back to me because I save them thousands of dollars with punctuality, firm and tactful negotiation, and helping them to avoid costly mistakes in their real estate purchases.

...Heaven forbid a real estate agent ask fees for his services. Agents who add real value that equates to dollars saved and higher profits for clients have no trouble outlining compensation for their professional efforts and receiving payment at the conclusion of a successful transaction.

Good luck Mike!  I wish a profitable year for you and your clients!

  • February 21 2012
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Dave, thanks for your opinion but you are missing the point.  You ought to start your own thread on that topic.  Rita-I am not sure that I am comfortable stating our commission fee to be anything other than what it actually is.  How do you restate it on the HUD?

Mike, you picked up on exactly what I am concerned with.  Why does B.O.A., acting in concert with the seller, care what the buyer pays in any respect to the transaction.  It does not affect the bottom line an any way especially if it helps achieve their ultimate goal...selling the house. 

Of course, we have all found out that B.O.A. is not afraid to change their mind during a short  sale process, but it only compounds the problem when they approve certain line items only to disapprove of them a mere 48 hrs. before closing.

I rarely take such bold stances on these forums but I think that Bank of America will be forced to change their practice of doing this in the future.  I'm not sure if it's their lack of ability to accurately negotiate these deals the first time that the HUD is submitted or if it is strategic on their part.  Either way, it is clearly unethical for someone on the seller's side to dictate what fees a buyer can or can not pay.
  • February 21 2012
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Just to clarify to everyone, the OP mentions a 'brokerage fee'

This is a brokerage administration fee that is charged by the broker to all clients, regardless of whether it is a short sale, foreclosure or traditional sale. This is not a fee for administering a short sale transaction. It is a fee charged by brokers to cover back end costs of the transaction and the perpetual cost of maintaining the clients records.

The agent doesn't share in the fee and if the client refuses to pay, the agent pays for it out of their own pocket. The broker won't waive the fee. Ever.

The fee is not hidden from buyers or sellers. It is clearly spelled out in either the buyers or sellers representation agreement. Do I want to charge the fee? No. But I don't have a brokers license.
  • February 21 2012
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Profile picture for nwhome.us
The deal isn't fully negotiated until it closes. 
Part of BA's due diligence is to review the HUD statement, so I don't have any problem with it at all.  Who's the investor?  They also have a right to review it.
I also agree that if we, as real estate professionals, aren't prepared to include short sales in our standard practice of business (our commission), we aren't professionals.  In other words, I think that all this business that has sprung up around specialized short sale negotiation is a rip-off to buyers and sellers.  Short sales are part of the bloody market today.
Having said that, there are plenty of opportunities for "experts" to earn fees by teaching what they really know about the subject to undereducated brokers. If you can't teach it a group of professionals I don't think you have a right to charge a client for it.
  • February 21 2012
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Profile picture for Rita Walker
From my experience with BOA it is not the fee that concerns them, but how it is stated on the HUD. You must find somewhere else to put the fee so it does not show up in an unacceptable way. It does not make any sense, but but that is how their system is set up.
  • February 21 2012
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Profile picture for sunnyview
"They dictated that a brokerage fee that our firm charges with each transaction be removed."

Can I ask how much your charge for the brokerage fee? I would think that the regular commission would already cover the agent costs associated with buying.
  • February 21 2012
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My opinion is that a brokerage that charges a buyer a fee is ripping off the consumer.
  • February 21 2012
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