Asking the buyer to pay for negotiation AND cutting the selling agent commission
There seems to be a trend now of requiring the buyer to enter into a contract to pay for the short sale negotiation, but not only that to also make sure the selling agent gets less commission when the lender reduces the amount. I have seen listing agents in our MLS doing this and to be honest I really wonder if the seller knows what is going on.
In my opinion they are not being told that this could be frightening away buyers and buyers agents - and it really is a convenience for the listing agent and not the seller. One listing broker has an attachment which is a third party negotiation agreement produced by a Texas based company that is signed by seller and requires buyer signature to agree to pay them 1% of commission. The agent states that the offer will not be presented unless the buyer signs it. It also does not display a California Real Estate Lic # so I could be asking my client to sign something that is in violation of the law. Is he telling the seller that this is could make buyers agents and buyers avoid the listing? Does the seller know that there are perfectly good short sale agents out there capable of negotiating their short sale without this agreement or cost to buyer?
Not only does he insist on this agreement, but he also states that if the lender reduces the commission then the selling agent will get hit with 60% of that and the listing agent only 40%. He has the selling agent commission at 2.5% so if he gets 6% he already stands to get 3.5% if it doesn't get reduced. And he is not doing the negotiation. Does the seller know he is short changing the buyers agent because he can get away with it by law?
Seems to me that this is not ethical and this broker has his own financial interests foremost in his mind before his clients. But it is perfectly legal and so here we are with agents who take the Realtor pledge going ahead and doing just what they say they won't do because they have the opportunity to get greedy. I believe that the banks should step in and stop agents from doing this kind of thing, I bet they don't even get to see this third party agreement. And the DRE and the Association of Realtors should come down hard on those that behave in this way. But I doubt they will. Legally the agent can set the split on the reduction how they want - 100% off the buyers agent side if they are really greedy. I think that this kind of thing should be written into the listing agreement that the seller agrees to short change the buyers agent if the lender reduces the commission.
Taking a pledge of ethics does not mean that you will abide by it, and if you don't, what can anyone do about it? A big fat zero. Except avoid the listings or make a black list of agents that behave in this manner. I personally am telling my clients what the agent is doing and out of loyalty to me they are telling me they don't want to go see that listing.
Unethical greedy Listing Agents - you suck.
Replies to This Discussion
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Permalink Reply by Jeff Payne on
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Ray, I agree with you. I always follow the rule of treating agents the way I want to be treated, especially in regards to commissions. I ALWAYS offer 50% of the commission to the selling agent and there have been times that on non short sales I cut my commission to the seller to make it happen and NEVER asked the selling agent to do so.
As far as the amount being charged to a buyer for short sale negotiations, that is something that is negotiable and I happen to think that the listing agent may be in some hot water if they do not present any and all offers to the seller, even if that offer is without the buyer paying the fee. They better present the offer is all I am saying. I think that there may be many times the seller doesnt even know that the agent does not work the short sale themselves, instead there is a third party with no fiduciary duty to the seller.
I have no issue with agents hiring 3rd parties to negotiate a short sale, my only thing is that the listing agent should pay for it or at least expect to have to pay for it if a buyer wont pay the negotiation fee. The listing agent is getting the benefit from the short sale negotiator.
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Permalink Reply by Dieter Diaz on
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I don't see a problem with paying .5% of commission towards negotiation as the listing agent or the negotiating brokerage are taking on the task to not only attain a prompt approval, that will be for the offered amount by the buyer without much countering back and forward and more importantly without any deficiencies, cash contributions or cost reductions that can end up costing both agencies more than it should. This of course would or should be the right way to go about it, but in this down market some people are going too far to make sure they profit more than the other party. I don't see the point in creating a bad name for your self and your brokerage by gauging commissions and trying to intimidate the other party.
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Permalink Reply by Ray Snook on
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I agree with both of you. I object to the whole idea of profiteering out of a short sale just because opportunity arises. This is not what we are all about as Realtors. We are about doing the best thing for our clients and not putting ourselves first. And I posted this thread because I do object to an agent who refuses to present an offer unless you follow their conditions and their rules. That is illegal as far as I know. When I called CAR legal about it they just did their usual sit on the fence "well how can you prove it is not the seller stating this" The association gives us a Code of Ethics to abide by and when someone doesn't - the association just says "don't bother us with it, we don't really care."
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