It's interesting that I came across this topic today because I am going through this nice, but won't go into details.
I've NEVER done this practice on my own because the contract and conditions of sale are between the buyer and seller. If my seller makes such a request on his/her own merit then that's different. Agents SHOULD NOT be putting in their own conditions as part of the contract and I highly doubt that an average seller would be making such a request on their own. They are doing so at the direction of their agent and that's where I personally think it muddies the water ! I've even seen agents request a higher commission in the purchase contract!!! WOW!!! Since when does a buyer request a higher commission for their agent as part of a condition of the sale??? Another topic for another day!
I think it's interesting here that many agents are screaming this practice is ILLEGAL, yet they don't reference any legal statue. However, one agent (Dennis S.) referenced paragraph 18 of the RPA, but if there is a counter issued and the seller counters out that section (just like anything else countered out), it will supersede that requirement (if agreed upon by all parties). Another agent (Anna M.) referenced RESPA 24 CFR 3500.15, but I don't believe it applies here because that section pertains to AFFILIATED Business Agreements and a seller is more than likely not going to have an affiliation with a lender unless he/she owns the mortgage company, at which point it must be disclosed. Another person, investor (rbui75) makes some great points with regards to being the SELLER making certain request with regards to conditions of sale with HIS property(ies). Another agent (Phyliss M) said she spoke to her Broker and was told it's DEFINETLY illegal, yet never mentioned any statue that the Broker may have made reference to...We all work together in an industry where I think there is a lot of uneducated agents, Brokers, Managers and alike who just say it's something is illegal or unethical because someone else told them so, and don't take the time to really research the matter or call for legal advise.
I've been in this business for over 10 years, a Manager/Broker for six of those years and I am not afraid to say, "I don't know, but I'll look into it" if I don't know something to be certain. I'm currently doing some research on this topic because it's becoming a common practice in this market and my next step is to call the C.A.R. legal hotline to get a more direct answer from an attorney. After all, we pay our C.A.R and N.A.R. dues for a reason and this is a great resource for us to use, yet most don't. They run to their Broker/Manager (or another agent) to look for an answer instead of doing their own due diligence. Not to say Broker/Manager or senior agents are not a great resource, but what if they were given wrong advise or information. AND, if you do go to these people and they give you an answer of "It's definitely illegal or unethical", ask them to reference the statue so you can read it for yourself and get more educated.
I will not say something is illegal or unethical without something to support it. AND so far, I've not seen ANYTHING outlined in RESPA, Fair Housing Act or any other resource to indicate this practice is illegal.
To my fellow agents, Broker, Managers, etc.: Let's take a more proactive and professional stand with regards to our industry standard and get more educated on the laws under which we operate. We are already looked at by many consumers as a profession that requires VERY LITTLE education, training to do what we do, yet we are in a profession with an unlimited income opportunity and are dealing with probably one of the most complex legal contracts/guidelines/statues of any state. We are not considered by most out there to be in a true professional career, however we are required to maintain a state license to practice our business, which qualifies us as a professional industry.