In my experience, foreclosures often require *more* work. It's true there is not much work on the listing side -- there are no agent tours, open houses, showings you have to set up with the seller, etc. Always vacant, they are also easy to show for buyer agents. There is much less of the usual (some would say "fun") work of real estate agents -- but a lot more bureaucratic/legal work, that many would describe as "tedious and risky".
All the closing work still needs to be done, and these kinds of properties are much more likely to have title issues and other snags. I had one where the city required a working water meter for closing, but it had been stolen. These properties may be in poor condition, with utilities off. Banks will typically not turn them on, in case it blows up or leaks and lowers the property value. You can't inspect properly unless the utilities are on, but you can't turn the utilities on until after closing. No dating until after you're married!
Sometimes you also get invited to the "occupancy permit" dance, where you can't close without an occupancy permit, but can't get an occupancy permit until you fix things... which you can't do until you close. Usually some temporary permit can be arranged, or you just can't occupy it while you're fixing it up.
Finally, the legal risk on these -- as your broker may be about to find out -- is much greater, and open-ended.
There's probably some statute of limitations, but in practice lawsuits can crop up years later. It's never
The bottom line is, you're engaging the full services of the broker, who is incurring all these risks.
Commissions are very low, so in general these deals are high risk / low reward. In order for brokers to do these at all, most charge a minimum commission. A typical minimum is $2,000. So if the commission is $1,250, and the buyer agency agreement had a $2,000 minimum, the "cost sheet" I provide buyers would have the extra $750 on it.
Needless to say, I disclose this *when they start looking*, and remind them of it frequently, especially
before presenting an offer. Unpleasant surprises = lawsuits!
Without these minimums, it would not be worth it for most brokers to take on
these deals, so buyers would either be self-represented -- assuming all duties of the agent, with associated
risks -- or sub-agency would return, where the seller's agent would do everything, but only represent the seller.
An extra $3,000 seems excessive (mine would be more like $750), but I don't know all the particulars of the case. Unfortunately, if you signed something agreeing to pay $3,000 at closing, there's probably very little you can do legally. (Standard disclaimer to seek legal advice from an attorney.) Make sure it says $3,000 extra, and not $3,000 minimum (in which case you'd pay only $1,750). The HUD settlement sheet will show the actual charge.
You can still *try* to negotiate the fee with the broker; you haven't closed yet, and commission is negotiable
by law. If you signed a contract, he can hold you to it, but he doesn't *have* to. You have little to lose by
In the end it may be that all you can do is file a complaint. It's a lesson to you to read things carefully and ask questions before signing, and a lesson to the broker to be a lot more transparent about disclosing fees!
Agency requires more than simply putting papers in front of someone and asking them to sign, or even reading contract clauses out loud without further explanation. Agency requires *making the client understand* the implications and consequences of what they're signing, so that they can make an informed decision.