I have been doing short sales for more than 8 years now for agents all over the country and EVERY time a Servicer has known the Buyer is an agent and is expecting a commission, the commission gets denied...always has in the past.
I have a "situation" in Virginia where one closing attorney says his client CAN get paid when he buys a short sale property for himself.
OF NOTE - This attorney does about 5 closings per month for this agent/Investor.
The agent that is buying a short sale for himself is using an LLC on the sales contract. His buying and having the LLC has NOT been disclosed to the bank and he is demanding to get paid his 3% commission.
I have tried reaching out to:
The Servicer (keeping the name off here for now) - was only read the FHA guidelines, which are of course filled with "legalise" that seemed to go either way.
Called HUD - 800-CALL-FHA - told me to call RESPA
Called RESPA - 855-411-2372 - they said they could not tell me and said to try NAR
Called NAR – 800-874-6500 and they said they can not give out "legal advice"?
Any help or feedback is GREATLY appreciated.
Again, ANY help, thoughts, guidance or feedback is welcomed and appreciated (and can be directed straight to me at Ben@ShortSaleShop.net if you have any "lengthy or legal" advice on this you wish to keep private.
Thanks again....all my best to everyone.
Ben Benita
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The Fannie Mae Arm's Length Affidavit states that the buyer can not receive commissions. I would say this includes having another agent represent you as buyer, if that agent is going to give part of the commission to you after the transaction. It seems unfair but I guess it's the way it is.
I believe there WAS an arm's length but it only seemed to address direct relatives as I recall.
The REALLY quirky thing, beyond the obvious you are pointing out, EVERYONE I spoke to at Suntrust, HUD, NAR, The Virginia Realtor Board, etc. would not say definitively that this was or was not ok?
No one anywhere could find it written in any of the HUD/FHA guidelines were it explicitly stated the Buyer on a short sale could NOT receive a commission, guidelines as I recall only stated the max. commission could be 6%, no place did it define who could get what (though it DID explicitly state the SELLER could not receive a commission as an agent on the short sale of his/her own property)
Tony, I was made aware of it 2 days prior to closing.....I asked Suntrust about it and they said "let it go, it has already cleared Q and A"
I do know 9 times out of 10 we are asked for the articles and member information for the LLC, we were never asked in this case by Suntrust.
We had a MAJOR issue when the Buyer refused to do a split settlement and came to find out (or was our best guess), he was VERY concerned about the Seller's title company finding out about his being a member in the LLC buying the property.
Again we figured if the Seller's title company knew HE was the Buyer on the short sale and trying to get a commission that the transaction would implode.
It comes down to simple ethics of this agent. Just because Suntrust did not ask for the the LLC docs does that eliminate the duty of the agent to disclose i? What has that buyer/agent done to EARN a commission? Is there am Arms Length Affidavit required by Suntrust that may comeback and bite you in the... you know where?
I went through ALL channels I could on this and none would give a definitive answer or prove anything either way.
Had it been disclosed up front, no issue here, BUT, he made no effort to tell Suntrust of his being a member of the LLC that purchased the property nor of his getting a commission.
To quote Sunturst:
"Ben, it made it past Q and A......just let it go"
As seems to ALWAYS be the case with short sales, every situation is different, property by property, Investor by Investor.
Why should he get a commission. There is no Agency. He is a principle And you;re saying that you are not disclosing his LLC relationship to the bank. That's trouble
Wells Fargo DOES NOT ALLOW the buyer to be paid a commission as agent on their own short sale purchase transaction.
This may be a servicer/lender internal policy more than other party rule or guideline.
It may be legal (allowable) by individual state laws however that probably doesn't mean any servicer/lender/investor has to accomdate that.
Ben BOA just published some guidelines stating if a buyer was a licensed agent representing themselves they CAN get a commission. They didn't differentiate if it was or wasn't FHA but I've seen it handled both ways. I've seen servicers deny it and then of course BOA now publishes the agent can get a commission
https://agentresources.bankofamerica.com/ss_news_12DEC04
Connection
Commission Paid?
Buyer (Including Individuals Representing Entity Buyer)
Representing self with valid license
Yes
I believe this just applies to BOA own portfolio and/or non-GSE, VA and FHA Loans.
I had BB&T pay a disclosed agent/buyer a commission.
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