I have a short sale with BOA on the first, Chase (turned over to a lawyer) is on the second. The first is for $180,000 and the second is for $40,000. This is a cooperative short sale where the bank set the price. The rep for the second wants to get in everybody's pockets. He wants funds from the seller, asked if the buyer would contribute to pay off the second, said Chase would reduce my commission to 5 percent, etc. What are the "rights" of the second? Can they see the HUD, reduce commission, ask the buyer to contribute, etc? I know they can ask for anything but I'd like to know what is typical and expected.
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1) Whatever the agreed upon commission is included in the Listing Agreement between the Listing Broker and the Seller.
2) There can be no Commission Terms included in the Purchase Agreement.
If the lender will not pay the Agreed-upon Commission rate, the Listing Broker has the right to collect it from the Seller per their Listing Agreement.
They could ask you to deliver them a golden egg if they wanted to. The 2nd knows they are getting nothing so their negotiators are much more aggressive in order to limit their losses. The answer to all their questions is NO.
"Company Policy, I cant and wont reduce my commission. Even if that means the 1st has to foreclose and you get ZERO" .. see what they think about that.
"No payments can be made outside HUD to pay off 2nd liens by the buyer. The 1st will only allow _ dollars to the 2nd". Period.
No, they do not have that right, and you need to escalate. On a cooperative short sale B of A will get involved. Have you checked if it is FNMA or Freddie? Recently thay have helped me a lot. Do not give up. Go back and ask for 7%. What I do is always start the transaction with 2 HUDs, one showing the 2nd get a lot, going to the1st, and one showing the 2nd with very little, going to the 2nd.
technically and legally, the neither the first or the second has the authority to reduce a commission since it is a contractual arrangement between a buyer and seller. That is why many times, the approvals merely state a net amount to the lender(s). The lenders let everyone fight over their legitimate commission, fee etc. However, to get the deal done, sometimes agents etc must reduce their fee as a practical matter bit not as a legal matter.
Paddy Deighan J.D. Ph.D
With all of the files that I have processed basically the bottom line is the 2nd can ask for anything they want and can hold up the full approval of any file. If they don't agree and you can't negotiate something with them the deal is dead.
If your concern is commissions there is a company that can help you Recover Fees on files that you could not get your full 6% on. http://www.feerecovery.net/
If anyone has tricks on getting the 2nd to agree to what the 1st is giving pass them on....
thanks!
Melody - Sacramento, CA
Just say, "NO!"
p.s.,
We just got 7% and firmly refused to reduce! It closed fine.
I usually tell the 2nd/3rd lienholders that they really should have no rights to what the 1st lienholder is allowing because essentially they(the 1st lienholder) really dictate the details of the sale and they have offered to pay 6% commisssion....it's worked every time. :D
As others have said, try to negotiate a settlement / bottom line first, then figure out how to get to that number.
Has the attorney detailed everything they "want" in writing? If not, and your negotiation breaks down, I would ask them to put everything into writing and to be very detailed. Then I would go to the Media (with the seller's permission of course).
Another tactic I use when negotiations become unreasonably difficult is to record all telephone conversations. In fact I actually add a line to the bottom of the 3rd party Authorization that states "XYC Company records all telephone conversations with lenders, servicers, and attorneys". When it's written on the Authorization (which they need in order to speak with you), they have been forewarned. Make sure to abide by your state law regarding the recordation of telephone calls. I've only had one situation where I was asked to shut the recorder off and that was with LPS Property Preservation! - And by the way, when they know the call is being recorded they are much more careful and cooperative. I had one person that thought I was bluffing until I sent her an e-mail with the recording attached. They backed off and settled for an appropriate amount without touching commission.
Thom - What device do you use to record phone conversations? How are they sorted/filed?
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