10% commision on a Short Sale?

Question

Thought i would start a new thread. It came up in conversation today that a typical real estate transaction for my Brokerage we are charging 6%. For those who know the bank is the payer in this transaction. In my experience i have had several banks try to lower this in negotiation. I am very adimant with the bank and tell them to talk to their legal department before they try to lower my contracted 6% commission. I have never lowered my standard. So, this posed the question, or DARE from K. Marie Poe, CAN YOU ASK FOR 10%? So... I'm taking the DARE...

Has anyone charged more that the standard 6% on a short sale and gotten it excepted?

Michael Galloway · Answer

fannie mae or freddie mac.

J Scott · Answer

Okay, so you're just talking about Fannie Mae?

Michael Galloway · Answer

J  Scott   I a glad you call people out, it keeps it real here. And i appreciate it.

I agree with your ethics about whether i would do the transaction if the commission was cut, of course i would still do the transaction.

However, with the documentation presented below. i have yet to cut a commission, in addition the brochures linked below, say to use them if the lender is uncooperative with the  6 percent commission.

Please use both of these depending on loan servicer

here is the links you will need to guarantee a 6% commission on a short sale. It comes right off of the freddiemac and fanniemae websites  I think it page 5 of freddies, fannies , i just use this handout attached below

http://www.freddiemac.com/singlefamily/service/docs/Short_Sale_Fact_Sheet_Pub_908.pdf

http://www.realtor.org/sites/default/files/handouts-and-brochures/2009/fannie-mae-confirms-short-sales-commissions-policy-
2009-02.pdf

Maybe the term i used, illegal, was not the correct choice. I am just following their rules. When they try to break one of their own rules,  contrary to or forbidden by official rules, regulations i termed it illegal. semantics

hope this helps everyone  
MG

J Scott · Answer

First, on what "legal" grounds do you believe you can force a bank to give you any particular commission?  The bank has no obligation to agree to a short sale under ANY conditions (other than perhaps those recently mandated by the Federal government), so what exactly do you expect their lawyers to tell them?

Second, what if a bank refuses to pay your desired commission?  Would you not complete the transaction if the bank refused to budge?  Would you make your client pay the difference?  I'm not sure the bank would even allow you to charge the seller the difference -- on the HUD, the bank would protest, and POC you'd be breaking the short sale affidavit you signed saying there were no financial agreements other than what was disclosed on the HUD.

It's all well and good that you take a hard stance with the bank -- and it's great if they cave and you get your desired commission -- but arguing that you have any legal right to a certain percentage doesn't make sense to me; and implying that you'd forego the transaction or charge your client the difference seems flat out unethical for a short sale.

Again, as a licensed agent myself, I'm thrilled if you can get every possible penny from the bank, but your stance seems a bit too ideologic here, as opposed to doing what's best for your client.

Just my $.02...

Joel Owens · Answer

I have gotten local banks before on commercial deals that were smaller in size to agree to pay 8% to 10% in some cases.

The larger deals that would be a much harder sell because they have to answer to the investors on the loan and the commission being too high gets push back because the investors on the loan are taking such a hug loss to move it.

Usually the sellers have no money to make up the total commission so the bank makes a demand and you say no and then after awhile the bank gives in and pays. If the bank never asks then they do not get the discount. You would be amazed how weak some brokers or agents are when it comes to this and they will work for nothing.

If they can't even prove their worth for the commission they are a very weak negotiator.

Michael Galloway · Answer

Wayne Brooks  thank you for the information. Since Freddie and Fanny own and purchase more than half of all new mortgages i guess we could say that a 6% short sale is good for 50% of the time.

K. Marie Poe i have never had Short Sale Owners pay the selling commission.

Has Anyone had their Owners come in with selling commissions if the commission was cut?

Account Closed · Answer

The point of my challenge wasn't really to see if you could get 10%.  Rather it was to test your theory that the lender has to accept the commission because the seller contractually committed to it.  The lender doesn't have to honor any part of the listing agreement or purchase agreement.  My guess is the lender's all have internal policies regarding max. cost of commission they are willing to pay.

Do any short sale agents out there make the seller make up the difference on the listing commission or short sale fee when the lender wants to pay less.  Because the way the contracts are set-up, that's your real remedy.

Wayne Brooks · Answer

@Michael Galloway,
We know, this is a constant battle with some lenders as to what commission they will "accept".  FNMA and Freddie guidelines specifically protect a 6% if stated, but ONLY if the original commission was 6%.  If it was higher, you open yourself up to a commission Lower than 6%.  Strange, but true.