Are the sellers allowed to pay the difference in commission if the lender offers less than the seller agreed to?

When I took the listing ( short sale ) I charged the seller 7% and they agreed to it ( 3.5 for buyers agent and 3.5 for the listing agent ) but when we got the approval from the lender, they cut it to 5% - I discussed it with the sellers and they are willing to pay the difference but my broker has objected and said I can not do that.  I can only get what the lender has decided to pay.  Is that correct?

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When taking a short sale listing all terms become subject to lender approval and that includes our commission. I think we have to go back to the lender and renegotiate any commission reduction with them. I have a dual agency SS that was just approved and lender reduced me to 3% from a 6% listing. I sent lender a letter of request to reinstate the commission per the listing contract between seller & broker. Taking on dual agency in a SS is three times the work and we earn every penny of our commission. When I take a listing at industry standard of 6% I am not asking a lender to pay anything more than I would ask a seller to pay in a traditional transaction. I am still waiting for their response.

I closed a SS with AHMSI where they verbally discussed cutting my commission - I told the negotiator that I was not asking them to pay anything more than the standard 6% for our industry and I earn my commissions - I asked him to please try not to reduce my commission. They paid the full 6% commission.

Short Sales are a negotiation from start to finish - if your commission gets cut Negotiate it back in with the lender. I do not attempt to collect anything more from a lender than industry standard and so far my commission has never been reduced...knock on wood!

Once again I see the words "Industry Standard" when referring to a commission.   Not allowable in a discussion among Real Estate professionals unless you want to get accused of price fixing or an anti-trust violation.

Amen. I would delete such comments.

 

If the seller is paying $ to broker not shown on HUD, receiving relief from lender (ie no judgement / note) and not disclosing to lender it
Likely is not right. All short sellers are in distress....... Distress their property is under water !

In Arizona, many short sale agents used to charge the seller a retainer fee paid at the time the listing was taken.  This money did not appear on the HUD statement and most sellers were very happy to pay it.  About a year ago, our real estate commissioner came out with a ruling that said an agent could not accept any money for doing a short sale.  If you charged a retainer fee, you would have to charge it to everyone, short sale or not.  So, although the short sale process is a ton of extra work for the agent, they are not allowed to be paid for their effort.  As an agent, you are being paid to sell the house and can charge whatever you want for that, but you need to be very careful not to charge extra for anything that can be tied to the transaction being a short sale.

Brian Avery has it correct. To be legal the payment from the seller must be on the HUD. Then the lender would have to approbpve the final HUD. Although it could squeak by the underwriter I don't think it would. The bank will probably reject the HUD.

Mathew. That is not always true. Sellers can pay before closing and after closing without the figure needing to be n the HUD. In fact if it is a cash purchase RESPA does not even apply. There are many way to get paid paid legally.

First of all, Bryant, thank you for the opportunity to speak in your forum on prior instances, however I would request my information be taken out of the database for this forum due to the constant barrage of user comments that elude to commission amounts.

As evidenced by a post in this thread made by Penny Howard below:  "not asking them to pay anything more than the standard 6% for our industry".

In fact this entire thread hints at and leans toward how to force, coerce or even finagle an investor to pay a fee/commission that may not be in the best interest of that investor and/or home owner. That by definition is "fixing" or attempting to fix a system wherein a group at large will benefit from that practice.

That is unacceptable conversation and is a violation of the anti-trust laws, of which I mentioned in the last posting I made in this forum just about a week ago wherein that conversation leaned in violation of those regulations as well. 


I am posting this message here so that my personal position is crystal clear as a broker, real estate instructor, trainer and REALTOR to any regulators that may have an interest in this forum since it's topic is of special interest to the governments and lender/investors.

Agents and brokers that participate in a closed or open "behind the door" discussion regarding commissions are heading in an area that can get them in serious trouble with their State Real Estate Commission, as well as their local, state and federal governments.

Please remove all my data from your database.


Thank you.


MORE Realty Services LLC

Donald E Johnson

Broker - Owner

You said it better than I, but it's the same message.  Thank you.

Hi Donald. If you go to your profile page you have the ability to delete your profile. If you need help just let me know.

Anti- trust and Sherman laws are all about unfair trade and price fixing. We are certainly free to have an open discussion about commissions and how to get paid. What we can't do is say "Let's all get together and boycot ABC Realty's listing because their co-brokes are too low". 

So I am perfectly comfortable with this conversation but do understand if others aren't.

The real issue is lenders dictating how much we can charge for our services. That is the true issue and the issue that the Feds should be looking into. Which is another reason why I am perfectly comfortable having my seller pay me according to out listing agreement no matter what the lender tries to dictate.

The lenders have every right to dictate what they will allow to be paid out of the proceeds of the sale. But that's it. Any control beyond that is interfering with my contract with my seller and IS without a doubt a violation of anti trust laws.

No one on this thread is in coercion we are just having a conversation.

You are only partially right.   Even though the INTENT of this thread of conversation is to explore how to collect the commission we have contractually agreed to with the seller, the CONTENT of the conversation is suspect when the words "Standard", "Customary", "Usual" and "Industry Standard" are used.   As long as all involved avoid those trigger words, and we only discuss the PROCESS not the AMOUNT of commission, we should be in the clear. 

@Donald and Meli:  Thank you for pointing this out.

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