CAN A SHORT SALE LENDER LEGALLY REDUCE REALTORS COMMISSION.
I was recently told by another real estate agent that the short sale lenders due to fairly recent law that they can not reduce our commissions. Is this true and what is the Florida Statue that I can recite to them stating they can not do this. Also if the MLS advertised listing shows a 3% selling agent commission or it says they will split 50%-50% can the short sale lender still reduce the commission to 5%?
I am outraged that we spend twice the time and work, sometimes working 12 months on a short sale deal and AUTOMATICALLY the lenders reduce our commission because they know we are hungry to make any commission. They have us by the short hairs and they know it. WE NEED TO STAND UP AND FIGHT BACK. We didn't creat this mess, they did!!!
I am involved in a short now for 4 months. The negoitator on the deal came back and said we are only going to pay a 5% commission. I told the listing agent to go back and ask for at least 5.5%. The negoiator email the listing agent back and said if she didn't change the HUD to show a 5% commission by 12:00 noon that day, the deal was dead!!! Can you believe this??? I believe the short sale bank is Chase. If you can give me the Statue or any inside information I would be so ever gratefull. Chase also made the title attorneys drop their $1700 fee and we had to go back to the HOA to get them to reduce their fee from $8500 to $6500. They also refused to pay any of the buyers closing costs as we asked for only 3%. The buyers are putting 20% down and they property appraised for exactly what we offered. And they insisted on us dropping our commission to 5%
What can we do???
Replies to This Discussion
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Permalink Reply by Denim Wallace on
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If it's a Fannie Mae property they aren't suppose to reduce the commission. Do you know who the investor is?
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Permalink Reply by Julie Wilkinson on
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When you say investor, do you mean the investor the negoiator is dealing with on the short sale? Or do you mean who the short sale bank is? The Bank is Chase?
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Permalink Reply by Patrick Kernan on
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The commission agreement is between you and the seller. Bank doesn't have to approve anything. The decision by Fannie and Freddie to "allow" 6% was a political decision. I doubt there is any law preventing the strongarming you're experiencing.
Take the 5% and move on to the next one. Best of luck to you Julie.
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Permalink Reply by Bryant Tutas on
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Julie. Lenders do NOT reduce commissions. They can how ever refuse to accept a short sale unless the commission you are asking them to pay is reduced. This does not mean you can't get the rest of your commission directly from the seller. The commission agreement is always between you and your seller. Just because the lender won't allow a certain percentage does not null and void your listing agreement. Just have the seller make up the difference. No biggie.
However if it's a Fannie or HAFA short sale then the lender has to allow up to 6% towards commission. Just Google "fannie short sale commissions" and "HAFA short sale commissions".
As for what can we do? Learn how to get paid.
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Permalink Reply by Shane Blondin on
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Bryant,
Can this still be done on the HUD? Bank only willing to pay 5%, Listing Agreement at 6%, sellers can show up paying the additional 1% in Realty Commissions? Most lenders seem to balk at any Additional $$ from a seller going to a party other than them. Please provide further clarity, I know this is an old post, but dealing with this issue now.
Thanks!
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Permalink Reply by Keri Sweetland on
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Excellent and very good information Bryant. SO much misinformation out there and strong opinions behind it-nice to see the facts clearly laid out for everyone! :)
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Permalink Reply by Esperanza Agbayani on
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Typically lenders only paid 5%. However with some programs like HAFA, lenders cannot reduce the commission as stipulated in the listing agreement. If this will break the deal, I will just take it and go tot he next one.
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Permalink Reply by Jeff Payne on
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Esperanza not sure how many short sales you have done but your statement of typically lenders only paid 5% is not the most accurate statement. I rarely ever see anything less than 6%, it is odd to see anything less than 6%, at least on the deals that I do.... most of those are for investment properties and not many FHA or Fannie loans. I have gotten as much as 7% but that is as rare as getting 5%. I do agree about taking it and moving on though
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Just getting back to SS transactions but 2008-2010 it was typical that the lender reduces the commission even to 4% that is why on the agent's remark in the MLS, we always put commissions to be split 50/50 based on lenders reduction of commission. At least here in California. I aways charge full commission on the Listing agreement but then lender was only paying 5% or even less.
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Thankfully we are back to 6% but yes in '08-'10 they were trying everything they could to mitigate their losses. Eventually though the investors at the bank have come around to realize that it costs them less to pay the 6% and get things sold at short sale rather than REO-these programs have certainly help to set the stage for that.
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Sure they tried :) That is their job! All they did was try and if you stood your ground and began the process with good, solid, clean offers, they approved 6% nearly all of the time..... back in 07 and 08 we got 7% many times but that dried up as the banks started to streamline their process
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Even back then, I have been doing them for 6 years and back in 2008 -2010 we were still getting 6%. Not often did we get less, BBanT always tried to reduce but we still got 6. I have probably done 200 BofA and Wells files combined since 2006 and would guess that 90% or more were 6%. I am in Florida, not sure if that makes a difference. We split 50/50 also.
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