How to get the smaller deals closed

Looking for tips on getting higher commissions paid. On lower priced listings ($65k & below). The lenders will not pay more then 6% on the listing which equates to under $1k in many instances. Most of these listing are taking 6 months or more to close. Several different challenges with financing contingencies. And several offers before closing. Anyone having success with charging a flat fees and having them paid-by lender or seller? Any other suggestions welcomed.

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Permalink Reply by Bryant Tutas on February 4, 2012 at 6:53am

As long as it's legal in your state you can collect an advanced fee from the seller. Or you can always collect after closing. Also, you could get creative and just offer a 1% co-broke BUT also include a buyers agreement where the buyer agrees to pay their agent an additional 3%. With a cash deal the buyer can just pay their agent. With a financed deal the seller can agree to pay 3% in seller concessions because we know in most cases the lender will agree to this. The buyer can use that 3% to pay his agent. You make 5% and the BA gets 4%

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Permalink Reply by Darlene Root on February 5, 2012 at 12:14pm

It is not legal in any state to collect a commission up front from the sellers.

According to the Federal Trade Commission’s Mortgage Assistance Relief Services (“MARS”) Rules (16 C.F.R. Part 322). A real estate agent cannot charge the seller an upfront fee for doing a short sale or any type of modification to their mortgage. In fact, charging an upfront fee will result in a $10,000.00 fine per incidence. http://www.ftc.gov/opa/2010/11/mars.shtm.

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Permalink Reply by Katherine Muhs on February 5, 2012 at 1:45pm

I love the creative thinking!

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Permalink Reply by MIke Carlos on February 4, 2012 at 8:16am

Hey Bryant,

What are your thoughts regarding listing agents charging the buyer a short sale negotiating fee to the buyer? I have heard of this being done in other markets with success. This way the buyer's agent doesn't have to get a discounted commission and it is not subject to the seller's lender scrutiny.

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Permalink Reply by Bryant Tutas on February 4, 2012 at 11:54am

as long as the buyer agrees I have no problem with it at all.

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Permalink Reply by Joseph Alfe on February 4, 2012 at 1:52pm

Technically, an agent that has a listing agreement cannot charge a fee or commission that is higher than listed on the listing agreement. So, the way to get around that would be to put 7% on the listing. Most likely, the sellers lender will only pay 6%, but then you can charge the extra 1% to the buyer, as long as it's disclosed in MLS remarks.

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Permalink Reply by Michael Schneider on February 5, 2012 at 12:09pm

@Jeanine Yes, low value underwater property is a problem, no question. The unfortunate reality is that not every homeowner can be helped by a short sale. Also, lower valued property that is nearing foreclosure is also more likely to have other encumbrances, or have sellers who declare BK, or buyers who walk.

I work hard to help my sellers and when I take them on, I'm committed. But I've also learned the hard lesson that some property needs to foreclose so that the encumbrances can be extinguished.

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Permalink Reply by Michael Schneider on February 5, 2012 at 1:20pm

@Darlene. The FTC stated that portions of MARS would not be enforced. The Reg stands, but portions will not be enforced. Pretty sure "advanced fees" was part of that forbearance for RE professionals. State laws may govern, however, if state laws prohibits such advance fees.

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Permalink Reply by Darlene Root on February 5, 2012 at 1:38pm

This is a Federal Law, therefore it is not up each individual State to interpret. I have not seen any revision to the orginal 2010 MARS Law. Do you have a link for that so that I can review it?

Our attorney has us use a MARS disclosure for each deal that we put under contract. I guess he likes belt and suspenders.

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Permalink Reply by Darlene Root on February 5, 2012 at 1:49pm

I found the update here. http://www.ftc.gov/opa/2011/07/mars.shtm. I would still be careful in collecting a fee upfront being as the laws are changing every day.

Thanks for the insight.

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Permalink Reply by Bryant Tutas on February 5, 2012 at 2:25pm

Darlene. MARS no longer applies to agents negotiating short sales as part of their regular business. This was a revision passed down by the FTC last year.

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Permalink Reply by Shari P on February 5, 2012 at 1:54pm

Some deals we make more money, some deals we make less money. I know what you mean because I've worked on a $70k listing for almost a year now and finally got approval on Friday (yea!) and I'm happy to finally getting paid for it.