Ben you raised some great questions and I?ll do my best to explain it.
I would agree that an ?assignment fee? could be questioned; however, if I read her post correctly she was looking to get paid for negotiating the short sale. In which case, her coming in as a consultant to the seller would be acceptable. I could come in as a realtor doing ministerial acts and charge whatever number the seller and I would negotiate. Although the sellers lender who is shorting the sale would have to approve my fee in order for me to get paid and I would not necessary see the buyers lender having an issue with me being paid as a consultant licensed or not; as long as that number is not through the roof; and, you can be sure that the seller?s lender, who she is negotiating with, will have already seen to it, that it?s not.
As far as the simultaneous close goes, it?s not a surprise to me that you have not found a title company (escrow agent) who is willing to do it. It did take quite some time for me to find a title company (escrow agent) who understood how to perform a simultaneous close. It works like this. I have the seller place the property into a land trust and assign the beneficial interest to me. (I forgot to place that in my response, sometimes I forget the small stuff is not a given to new people, so sorry about that) When we go to close, I close with the new buyer first and use those funds to pay off the sellers lien netting the monies in between.
As you well know not every title company will do this, which is why I suggested speaking with some fellow investors at her local REI club in order to find out which ones would accept this kind of deal. I actually taught my title company how to do it. So, if you have clear understanding of the double close and a good working relationship with a Title company, you may want to try that route as well. Some Title Companies no matter how much explaining you do will still not perform the close that way. Just as some sellers no matter how much explaining you do, will not sell. So I have to go back to my company motto? Some will, some won?t, so what, NEXT!
I hope that explains it, if not, question away, and I?ll do my best to rephrase it.
Posted by PaulaD on November 13, 2006 at 11:03:09:
I am not in the position to purchase a property I am negotiating a short sale on, so I am bringing another buyer/investor. How can I legally get paid if I am not a licensed real estate salesperson? I am being told that due to RESPA, an escrow cannot close with a payment to me as a fee. This is my first short sale and I was hoping to add a % on the net sheet as my fee. Thanks.
You absolutely can add a fee to the HUD1 or sellers net sheet as a consulting fee. Real Estate consulting is not exclusive to us realtors like brain surgery would be exclusive to a doctor. Anyone can be paid as a consultant. The question here, is not an issue of RESPA, it?s any issue of the lender (the sellers lender) approving the consulting fee on the net sheet. I can tell you that as a broker who negotiates shorts everyday. You will not be allowed to get paid a large fee. The lender will most likely allow no more the 2.5% of the sale to be paid to you as a consultant. If all else fails, place the home in a land trust and do a simultaneous close. I have land trusts for Missouri and Illinois. Not sure what state you?re in. If one of those applies email me and I?ll send you mine.
P.S. you?re going to need a title company that understands how to do the simultaneous close. Just ask around your local REI club, surely someone there knows one.
Posted by Ben (OH) on November 15, 2006 at 07:25:41:
Quite often the buyers lender also who questions the assignment fee.
Not sure how a trust bypasses the assignment fee. Fee still shows up on HUD1. I may be wrong but the trust simply changes ownership. What am I missing here? If you are suggesting the title company to close on the first deal then there will have to be cash to close out the first position. In my experience the escrow agent cannot and will not use the buyers lenders funds in this type of transaction. If the buyer has cash then it is a matter of the buyers lender approving the HUD1, if they see it at all. HUD1 on simul close would list the benficiary to receive the funds. Beneficiary is the seller, no? I suppose an assignment of benficial interest may work. But then again that would have to be outside of closing.