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.
Replies to This Discussion
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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I've had a couple of different lenders / servicers attempt to cut commission.
After the long drawn out conversation I tell the person I'm speaking with that I'd like to recap our conversation and my practice is to record the conversation for the file (I use Ring Central). When I turn on the recording option, an announcement plays announcing the recording of the telephone call.
I then recap by saying something like; "Hello, {name of negotiator and lender}, my name is Thom Colby and as you know I am recording this conversation. The purpose is to recap what we have discussed thus far noting we do not have a final agreeement at this point" I then state the facts repeating my name, CA DRE license #, subject property address, loan #, borrower's name, etc. I further state the offer amount, net to the lender (at my full commission) and any other particulars of the offer. Typically the negotiator will try to interrupt and correct the commission to which I let them know I need to finish my statement since we are on-the-record.
After all of the particulars are stated, I then ask if they have any questions or would like to correct anything. This is where it gets interesting - they always want to argue about commission and forget we are recording the call (their mistake). I always ask what company they work for, which servicer or lender they represent and if their company is owned, or financially affiliated with the lender. I also verify who the Investor is. I continue by letting them know I realize they have a job to do and so do I. I also help them to remember I am the Broker who signed the Listing Agreement not them, and the Seller and Buyer are in a binding contract (subject to lender approval). I ask them to repeat whether they are willing to decline the short sale because of a commission reduction of "X".
At the end of the conversation, I ask who (other than them) they would copies of the recording sent to as I can send it within seconds via e-mail.
I haven't experienced any commissions reductions using this method.
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Permalink Reply by Kevin - Greenville, SC on
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I'm surprised they didn't hang up on you when you told them that you were recording the conversation. That has been my experience.
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I'm surprised too but not so far !
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Permalink Reply by Lillianne Echevarria on
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I think this is a great idea!
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Permalink Reply by Patricia Broghamer on
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I have been a Realtor for 22 years and someone is Always trying to get into our pocket. 10 years ago it was the Relocation Companies and now the Short Sales Lenders. If we could ban together as Realtors, and Just say NO they cannot do this job without us. They need us worse than we need to cut our commission. Stand firm and together. Remember that we don't collect a regular paycheck every 2 weeks like they do and have benefits paid for like they do. Our risk is much greater and so is our Income Tax obligation. Every dollar and % counts to us. Also we need to be fair to those sellers who pay the higher commission and see our true Value. If you don't stand for anything you'll fall for everything". United we stand...Divided we fall. The state of Kentucky's motto on their state Flag. Pat Broghamer, Charleston, SC Realtor.
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Pat -
Your comments reminded me of a conversation I had with a negotiator about 6 months ago. The negotiator was trying to cut my commission and during our conversation I asked if, in addition to her salary, she was compensated on closed short sales - she said yes, they get a small bonus on every short sale they approve and close. I told her I thought that was just terrific and, as hard as she worked, she very likely deserved more than that small bonus. She thanked me for the comment.
I then said, ok, if I have to give up some of my paycheck, she should give up the same percentage of her bonus.
My transaction was approved with my commission in tact.
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Permalink Reply by Anja Kerstens on
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Thom, I must say you are great negotiator and I feel I can glean from your success stories. Hope others reading your comments about your skill with negotiators will help them as well. It's not only important for our clients to sell their homes before they end up as a dead asset but also to the short and long term health of the community.
Although 6% may seem the norm here in my market commissions are negotiated all the time; sellers are always negotiating a lower commission because they don't want to pay "top dollar" and agents are always trying to convince them that they are paying for quality service and results and aren't we worth every penny? It's just a question of what client and agent will accept and what the "norm" for the local market is.
Investors are just trying to be creative in recouping some of their losses and asking agents to reduce their commission the offset the expenses is a perfectly reasonable request, however, we don't have to agree to it and you have given us some ammunition. Thanks Thom.
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Permalink Reply by Julie Wilkinson on
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Right On Pat!!! We need to band together and say no to cutting commission. Not just cut our losses and move on to the next one. We are letting this banking industry do this to us. We do need to stand united.
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I always put 6% on the HUD but after reading these comments, I will put 7%. Commissions are cut all the time to 5%- 2.5% for each side- I fight it but unsuccessfully most of the time. Servicing firms are getting 1% and even if the SS is done "inhouse", it appears that they are reducing the commission. Having the link to HAFA Guidelines and FHA Guidelines may help me with the Negotiation. But, bottom line, is that I am more concerned about my clients having a successful short sale than I am about .5% more in a commission so if I feel I'm butting my head against a wall, I will agree and get the short sale closed. I'm not happy about it however.
But the goodwill generated by a successful short sale often results in multiple referrals to me for other short sales. And the .5% that the bank isn't paying me is far less than I would spend on an ad to try generate new business.
However, after reading these comments, I am going to fight HARDER with the banks!
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Permalink Reply by Cathy Ryan on
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I'm in California and the only time in past year a lender has cut my commission was on a $1,000,000 sale. They cut it to 5.5%. When I double end a transaction, the buyer is represented by my broker. It could be your location.
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The last time that I said no to a commission reduction the negotiator threatened to call my sellers and tell them that I was standing in the way of their short sale being approved (Wells Fargo 1st and 2nd) I list at 7% now but still about 50% of the time they take me down to 5%. Truly, as another agent mentioned, before you do that make sure your sellers are on board !
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Remember the Listing Agreement is between the Broker and the Seller - not the lender. That said, the shortfall in commission can be legally collected from the Seller per the Listing Agreement. I have never done this but I know others who have.
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