- "I am outraged that we spend twice the time and work, sometimes working 12 months on a short sale deal and AUTOMATICALLY thelenders reduce our commission because they know we are hungry to makeany commission. They have us by the short hairs and they know it. WENEED TO STAND UP AND FIGHT BACK. We didn't create this mess, theydid!!! What can we do?"
It seems like the lender is wanting to reduce her commission. While I can understand her frustration I am more inclined to solve theproblem than get frustrated over it. And since she asked "What can we do?" I'm going to tell her. The most important thing we have to understand is...Lenders do NOT reduce commissions.
They can however refuse to accept a Short Sale unless the commission you are asking them to payis reduced. This does not prohibit you from getting the rest of yourcommission directly from the Seller as per your listing agreement.The commission agreement is always between you (the broker) and your Seller.Just because the lender won't allow a certain percentage does notnull and void your listing agreement. Just have the Seller make up thedifference. No biggie.
And, if it's a Fannie or HAFA Short Sale then the lender has to allow up to 6% towards commission. If you work Short sales for a livingthen you need to factor in the fact that on occasion you may not get afull commission. You should already be aware of this and it should befigured in to the way you charge for your services. As a businessman Ido not rely on others to get me paid. I also do not allow them todictate how much I make. So what can we do? Simple. Learn how to getpaid.
Here are a few things I do:
- Charge a flat fee at time of listing. The fee is for listing the property and the commission is for selling it. Getlegal advice on how to handle this***.
- I guarantee the co-broke amount I offer BUT I take a larger piece of the pie if it's a full commission. If I get lessthan full commission then I may actually make less than the sellingagent. Their percentage remains the same regardless of how much I get.So on the average it works out to about the same. Make sense?
- Always separate the Broker's commission and the agent's commission on the preliminary HUD. Let the lender know thatthe commission is being split. Lenders want to allow less if the sameagent is on both sides of the transaction. Make sure they know thateven though this may be the case there are still 2 parties or moregetting paid. Show them where the money goes.
- NEGOTIATE!!! That's right. Just say NO!! Lenders ask for reductions because they know in most cases the agentwill just roll over and accept it. Don't be that agent. You will besurprised how easy it is to get them to give if you don't.
- Have the Seller sign a note. Why not? We can get paid a portion of our commission over time. The lenders do it. Why can't we?
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Nothing says you need to break it evenly. I have found that I as the listing agent is doing alot more work than the buyer. I am on the line to get things uploaded, negotiated, resent, renegotiated, resent.....you get my drift.
If the coop agent does not like it, they can go bid on another short sale. There are plenty out there. I know what my time is worth, they should know what they are worth too. I also let my seller know, that I will not accept them crying "poor mouth" to me when it comes to them needing to repair, replace, or contribute cash to close the deal. This is their credit on the line, they are usually not paying any mortgage, so they are living rent free. They should be able to contribute to the deal if necessary and not expect us the agents to do that for them.