Is this half full?

ADVANCE FEES

UPDATE – Notice on December 1, 2010 the Federal Trade Commission issued the Final Rule concerning the Mortgage Assistance Relief Services which bans advanced fees

Short Sales

Can I charge an advanced real estate commission on a short sale?  Yes.

Advance Fee Listings/Buyer Broker Agreements.

NRS 645.004  “Advance fee listing” declares that an advance fee listing is a brokerage agreement promoting the sale of real estate for an advance fee.  An advance fee can be paid to a real estate broker provided it is in accordance with NRS 645.322333324.  All commission payments still go through the broker, Prudential, Americana Group, REALTORS®, in accordance with NRS 645.280.  There may be no separate or distinct payment or compensation for performance of activities defined as loan modification, foreclosure consulting or providing of covered services outside of a real estate transaction.  Remember, a real estate transaction is, “assisting, soliciting or negotiating the sale, purchase, option, rental or lease of real property, or the sale, exchange, option or purchase of a business,” per NRS 645.005.

Can I keep the commission if the short sale does not close?  DEPENDS.  The Nevada Real Estate Division has verbally expressed a desire that funds accepted during the Short Sale processs, should not be retained, but returned.  My interpretation of the law is that an “accounting” must occur and then the monies can be retained.  I have asked the NRED to comment as of December 8, 2010.

Accounting of use of advance fee collected.

If you charge an advance fee you must, within 3 months after the charge or collection, furnish to your client an accounting of the use of that money.

Can I charge a flat fee and a percentage together at the same time?  Yes.

Federal law instructs that a real estate broker’s fees may only be charged if the broker is engaged independently and the fees are reasonable and customary. See HUD Handbook 4155.1 for additional information.  All charges to sellers and buyers by real estate brokers and agents for their services in listing and selling the home (“commission”) must be disclosed on Line 700 of the HUD-1 settlement statement.  Although RESPA regulates how the commission is disclosed, RESPA does not prescribe how a real estate broker or real estate agent determines the charge for his or her services in any contract with a seller or buyer.  The commission may be determined using a flat fee, a percentage of the sale price, or a combination of those methods.  See U.S. Department of Housing and Urban Development. January 22, 2010 Letter.

Is there an advanced fee listing form from the NRED?  Not yet.

Nevada law says that the Nevada Real Estate Division may require a form of brokerage agreements which include provisions for the payment of advance fees to be used.  However, this form has not been written by the NRED.  So, of course, I wrote one.  You can get a copy from your managers as of December 7, 2010.  It will be on Ameriforms and Zip on week of December December 13, 2010.

This is part of my short sale series listed below in alphabetical order:

7 Tips for Short Sale

Addendum to Short Sale Listing

Charging for negotiating short sales/Negotiators

Deficiency Judgments Nevada

Foreclosure and the One Action Rule in Nevada

HAMP the Federal Shortsale Program coming April 2010

Income Taxes & Foreclosures/Shortsales

Lender Short Sale Approval Addendum

Nevada Supreme Court Mandatory Mediation Program and How it Affects Shortsale

Nevada Short Sale Documents

Seller Being Released From Liability Language in Shortsale

Seller Liability After Short Sale

Short Sale Addendum to Purchase Agreement October 2010

Short Sale Wallet Size Answer Sheet

IRS PUBLICATIONS shortsales/foreclosures:

IRS publication on how 1099 taxes are calculated, exempt, etc.

IRS explanation as to taxes resulting from Foreclosure and Debt Cancellation.

Ten Facts about Mortgage Debt Forgiveness

Questions?  Call me. Darren Welsh, Esq. 702 245 1787  email me darren@dwelshlaw.com or drop me a TPS by filling out this form.

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