We have recently experienced situations in which the Listing Broker states the following in the MLS, "Reduction of commission by lender to be split 50/50 between the selling and listing brokers".   In these cases the Listing Broker is typically entering 2.5% as the offer of compensation.

 

If you see this remark you MUST contact the Listing Broker to determine the actual original Listing Broker's Commission.  Here's why: assumption,the original Listing Commission was 6% and the MLS offer to the Cooperating Broker is 2.5%.  In this case, the Listing Broker is keeping 3.5%.  Should the Lender reduce to 5% the total commission allowed, the 1% reduction must be shared equally as presented in the above disclosure statement.  Therefore, the Cooperating Broker will only receive 2%.

 

Let me take this one step further: original Listing Comission is 10% and the Offer to Cooperating Brokers is still 2.5%.  Short Sale Lender reduces to 5%.  That equals a 5% reduction to be shared equally as disclosed.  In this case, the Cooperating Broker gets ZERO. 

 

Smart Brokers will almost always attempt to use a Buyer's Broker Agreement in order to secure a minimum level of compensation.

 

Be alert and if this is the languange contained in the MLS you should obtain a confirmation of what the original Listing Commission is and get it in writing.  There's not any requirement that the Listing Broker make this disclosure.  Therfore, if they refuse I would recommend a Buyer's Broker Contract be employed or do not attempt to sell the property.

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  • Our MLS Required language is a bit different.  I think that your logic still applies. Good post.  One of these days FAR and the local MLS boards might understand short sales enough that they can have more specific rules in regards to compensation from other brokers.  I know some states,maybe even some boards that require the listing agent to pay what is advertised in MLS regardless of what the lender agrees to. 

    This is a short sale listing. Property is subject to a lien which may require release by the lien holder/3rd Party. Sale price and gross commission are subject to this 3rd Party approval, therefore compensation payable to cooperation brokers may be reduced, please call listing broker/agent for details.

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