How to stop short sale lenders from automatically cutting our commission

Nearly 9 out of 10 of my short sales, the lender cuts the commission from 6% to 5%. I am sick of this. They know they have us by the short hairs and do it automatically. Now I have GMAC being represented by IMPACT that wants to take 1% of my 6% commission. They want me to sign a new fee agreement and commission disbursement form. What can I do and how can this be stopped. 

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List them for 7 or 8% commission. Refuse to take the cut. They are bluffing.

I don't get a lot of commission cuts either, as least for properties under $400,000.  My $815,000 is at 5%, but that seems reasonable to me.

I say to the Brokers, the choice is yours.  I'm willing to refuse to do the deal for less than 6%, if the seller agrees.  I'm willing to walk away from an Investor that demands a commission cut.  Sometimes the Brokers will hang tough, and in most of these cases I get the 6%.  More often, the Broker is willing to accept 5%, in order to complete.

OneWest (did/does?) outsource to Fidelity and required that the Settlement Agent wire 1% directly to Fidelity, which I think is a sketchy practice.  I guess GMAC is following this practice?  (Why not wire 1% to the personal bank account of the VP of Loss Mitigation?  Anyone object?)

You can "just say no".  You want the deal, it's at 6%.  You don't want the deal, that's your choice.  There will be no cut in commission.  I routinely say this to subordinate lien holders who think they can control the commission.

But, the Parties must be genuinely willing to walk away.  That may be the hardest part.

Hey thanks Michael for the imput. I'm going to take your suggestion and just say no! We all need to be doing that with these lenders. They have pushed us around long enough. I;ll let you know what happens. Thanks again. Julie

Keep us posted Julie.. I get the request almost everytime. Sadly, after fighting tooth and nail I do not walk as I feel it wouldn't be fair to my sellers. My market really is 5% though. Most are 400K+.

My advice is just to go to the mat with the negotiators on the commission issue.  Have your broker make a call to the lender if necessary, raise a stink, talk to supervisors.  Let it be known that commissions are not to be cut form the very first phone call.  It make take a few extra days for an escalation to clear and approval to head your way but it is worth it.  

The only reason lenders cut commissions is because we allow them to.  (Now there are some instances where I have never seen them back down (HSBC for example).

Oh yeah, and these companies who charge 1%.  Tell the original servicer you refuse to work with them and most will take it back and negotiate in house.  

Good luck - now go jump down their throats!

Thanks for the advice. I sent a very stern email containing all the very helpfull suggestions the short sale superstars made to me. I told them under no circumstances would I lower my commission. You either take the deal or you don't. So we shall see what happens. I think you are right. Too many of us are letting these banks get away with automatic commission reductions. We need to stand up for what is rightfully ours. We work 3 times as hard as before and they want to pay us less. So we need to be a force and in unity say NO WAY JOSE!!!!! I'll let you know what happens. Thanks so much for responding. Julie

I have found that if you break down the commission into dollars they begin to feel silly that they would ask you to cut 1/3 of your income from that sale, if it was a 3% on one side or the other. Then ask them, "so 1% is $600 of my pay on this sale. The lender has already dropped the price thousands of dollars without blinking and now suddenly $600 is a show stopper?"  What is it worth to you to get it under contract and a quick close, with a skilled Realtor, such as myself; since every month is an expense and a liability to the owner/investor? Priceless!

Ask them if the lender accepted TARP money, if you know they did, tell them you already contributed to their bail out as a tax payer and it is not over with yet. Good Luck and go jump down their throats. I love that!   Pat Broghamer, Realtor Charleston, SC.

Ask the processor if they are a registered licensee in your state and to provide such proof. In most (all?) states, non-licensees can not earn commissions and you are not allowed to pay them either. Also mention "tortious interference" with the listing agreement. "Now, Mr. Processor, you aren't really asking me to break the law are you? If you cannot continue with the short sale processing because of requiring the fee, I can do you the favor and ask our state Attorney General for an opinion on your company's request. Do you want me to ask her? She is already cc'd on this email so that she has it for reference."

 

*I'm not a lawyer but I play one on TV. The above commentary is editorial in nature and should no be relied upon as legal advice. All legal issues should be discussed with an attorney.

US Bank usually will try (most of the Loans they Service are portfolio), and I usually get the commission cutting spiel from HELOC's too when the HELOC is the only one being shorted.  I usually have a short conversation with them why those are my 'guidelines', hang up on them and wait for a call back.

I've only received less than 6% once.  That was early on in my Short Sale career on a $700,000 property. I have received 7% a couple of times from Litton.

xx

OK we all hate to cut our commission especially these days work load and man hours or in this case woman hours, but you have to take a few things in account one do you have the time before foreclosure date to play hard ball with the lenders, second you are working for your clients and you have to put them first if you lose a deal because of 1% commission them you caused you client harm and if I was the client I will sue the living day out of my Realtor, lastly do you really have the time and man power or again in this case it woman power to delay this deal when you can move forward to the next one and make more commission, o by the way we have the second most powerful assocation in the world, let them past local and national laws that will not allow lenders to cut commissions on any deal. I wish you best of luck!  written by http://www.foreclosurepreventionaid.com

Incorrect.  I'm under no obligation to accept anything less that is stated in the listing agreement unless the listing agreement is written in such a way that say's I will accept whatever commission the Servicer dictates.

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