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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Permalink Reply by Joseph Alfe on February 5, 2012 at 7:00pm

Absolutely not.  The lender will never approve it, and charging distressed sellers is always a bad idea, and may run afoul of your states foreclosure rescue laws.

Permalink Reply by Bryant Tutas on February 5, 2012 at 7:10pm

Totally disagree. My sellers have paid me many times in addition to what the lender would allow to be paid from the proceeds of the sale. My listing agreement is with the seller not the lender. My sellers want me to be paid. I have been paid at time of listing, before closing, after closing and on the HUD at closing. As for running afoul of foreclosure rescue laws.....well not all short sales are in foreclosure and not all short sellers are in distress.

There are MANY legal ways top get paid with short sale.

Permalink Reply by Joseph Alfe on February 5, 2012 at 7:57pm

you are correct about all short sellers not being distressed, that's why I mentioned it.  It is not advisable to charge sellers anything if they are in distress.

Permalink Reply by Lilibeth Rose on February 6, 2012 at 2:53am

The sellers are in distress but apparently has the ability to pay some of the commission because they offered to pay the difference- but my broker threatened to revoke my license if I accepted payment from the seller- even if through the brokerage-and diclosed in the HUD 1 as Misc charge to the seller. 

Oh by the way, they were not behind their payments and in constant contact with the lender, they have to sell because they are retiring in the Philippines and leaving the country and must sell an upside down house.

The lender approved the sale in one month- this one was with Nation Mortgage

Permalink Reply by obed montez on February 6, 2012 at 5:55pm

You must not forget that the list belongs to the broker.  Any and   ALL types of compensation has to go thru the broker of record,  So what s/he says rules as long as you work under s/his brokerage.  

Permalink Reply by Len McGuirk on February 12, 2012 at 11:44am

I agree with Bryant on this thread. I don't believe a lender can dictate how much we get paid for the transaction. They can only stipulate what is being paid from the net proceeds of the sale. It seems like they would be interfering between the broker and seller's listing contract (tortious interference). To my understanding, that is not legal for them to do. I am pretty certain that our corporate attorney would take a stand if it ever became a problem for us to accept commissions from the seller that is additional from the lender max-paid commissions.

Permalink Reply by Bryant Tutas on February 12, 2012 at 1:51am

xx

Permalink Reply by Gunna Voigt on February 12, 2012 at 2:24am

I have several times changed the HUD 1 to 6% (There are laws that allow it for some accounts).  Since it  is a short sale, not a foreclosure law, it has nothing to do with foreclosures.  Once I had to change it twice. Well, I did,and I got paid my 6%. I do not know about sellers paying the difference.  In their financial statement, they show they are distressed, so they either lied or their status has changed.  I do not know the legality of them paying you under these circumstances.  

Permalink Reply by Teresa Keeler on February 12, 2012 at 2:34am

Have you considered going back to the lender and telling them that your broker will not allow your commission to be less than the standard 6%?  7% may be a little much for the lender but 6% is both a Fannie and a HAFA standard and most short sale lenders will back off and pay you this much. 

They will often try to cut your commission just to see if you allow it.  I would go back and find out who the investor is and argue that angle instead of trying to collect from the seller.  If your broker will not allow it there is nothing you can do to collect as all fees must go through him/her.

 

Permalink Reply by Meli Van Natta on February 12, 2012 at 11:22am

HOLD ON!   There is no such thing as a "Standard" or "Customary" commission.  When we start using those words we are leaving ourselves open to accusations of price-fixing and anti-trust violations.   Personally, I don't think the bank has any business telling us how much commission we can charge or receive.   Their role should simply be to determine how much NET PROCEEDS they are willing to accept to settle the debt, and let us, the professionals, structure the transaction around that figure.

Permalink Reply by Lilibeth Rose on February 12, 2012 at 12:03pm

Yes, Meli is corrrect, we must not talk about standard or customary commission- I do not have any standard commission -but I base my charges on how difficult a transaction would be and the amount of work I know I will be doing.

Permalink Reply by Rodney Mason on February 12, 2012 at 4:54am

All fees and items paid by a buyer or seller must be fully disclosed on the HUD-1.  There may be no outside agreements between any party that are not fully disclosed in the sales contract and on the final HUD-1.  If there are, that could be considered fraud.

When doing a short sale, the seller's lender would have to give their approval to any commsions charged and paid.  Since the seller's lender is the one taking the loss between the mortgage balance and the net from the sale, they have the final say in amounts on the HUD-1.

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