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Can an Agent receive a Commission On His own Purchase Offer

Posted by Janet Justice on April 5, 2011 at 12:44am in Short Sale Discussions
I listed a property that received an offer that another agent made, for their own company, to purchase the property. I finally got the MI to appove the offer after a back and forth negotiation. Now the bank doesn't want to pay the buying agent commission because he is a party to the transaction. The buying agent is furious because he would have negotiated the $2500 commission he was expecting by a lower offer for the purchase price if he knew his commission was not going to be paid. I think the buyer is going to kill the transaction if he's not paid. What should I do? Will the bank pay the commission to the other agent? It's a BofA shortsale.

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Replies

  • Jeff Payne April 6, 2011 at 2:12am

    Janet, I believe that Freddie Mac can not reduce the commission below 6%.  Remember, the broker is who gets paid, not the buyer/agent. Push back.   Arms length is between the buyer and the seller. Does the buyer have a relationship with your seller?

    Tell BofA that you are getting 6% as per Fannie/Freddie guidelines.  Your agreement in MLS to pay the cooperating BROKER has nothing to do with BofA

  • Trina Gonzales April 5, 2011 at 11:48pm
    I have never seen a bank pay a principal in the transaction on a shortsale.  I'm not saying it's impossible but I've never seen it.  Since it's BofA, it's probably worth it to let them decline the file and start over.  Have the broker represent the buyer/realtor.  A lot of times, BofA and most banks want to see another name on the contract so that they see no obvious conflict of interest. It makes the transaction look like someone is going into default on purpose when it's Non Arms Length like this one is.
  • Janet Justice April 5, 2011 at 12:17pm
    Freddie Mac
  • Jeff Payne April 5, 2011 at 4:45am
    Forgot to ask, who is the investor?  Fannie Mae?
  • Jeff Payne April 5, 2011 at 4:44am
    Janet, also if this is in equator, escalte the file, CC everyone when you respond to the negotiator. 
  • Janet Justice April 5, 2011 at 4:36am
    Jeff, that sounds like a great idea! I'll let you know how it turns out.
  • Jeff Payne April 5, 2011 at 4:26am
    I would ask the negotiator to provide the written guidelines that says they can not pay the cooperating broker because the agent is also the buyer and also remind them that the broker is who gets paid, not the agent and the split between the broker and his agent is confidential.
  • Janet Justice April 5, 2011 at 4:14am
    The buyer isn't a broker. He's just an agent who submitted an offer on his own behalf. I don't blame him for wanting  his commission. I'm sure he has broker fees.The purchase price was negotiated and approved by MI w/commissions to both agents. How should approach the negotiator with this issue?
  • Jeff Payne April 5, 2011 at 3:07am
    Janet, is the buyer also the broker of his company?  I would remind Bank of America that the broker is who gets paid, not the agent.  I don't see any reason why the bank won't agree to pay the broker, as a matter of fact I have seen it done with Bank of America.  Remember, the negotiators job is to negotiate, and you need to push back
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