Thanks for the thoughts. I think some clarification is needed. I am NOT concerned about MY commission in this case, but trying to consider this from a SELLING AGENT point of view. There's nothing worse than working your tail off on these deals, then finding out the lender won't allow you to make a decent commission. IMO, the short sales in this area are worth every bit of 3% to each agent, not the 1% or 2% the lenders would like us to have.
I've run across some really stubborn 2nd mortgage holders; even though they have NO leverage to speak of and stand to gain NOTHING, they still seem very reluctant to compromise.
I am focusing on FORECLOSURES and avoiding short sales like the plague!!!!

You know, Pamela, the whole issue of FNMA 'disallowing' commission reductions (as long as they are not over 6%) really skirts on price-fixing, which is what I thought our industry was so very against, don't you think? Odd that these large financial institutions can pretty much do whatever they please, isn't it? I suppose it's better than having our pay used as negotiation items, but even so...

In answer to your question, the 2nd lienholder can try to do whatever they wish, but they truly have little clout in the long run, and it is part of the seller's negotiator to establish right up front that their commission is non-negotiable. The fact is, in a foreclosure the 2nd gets nothing, and oftentimes they need to be reminded of that. Fannie and Freddie both, I believe, will only accept $2000 to a 2nd lienholder, and in my experience the junior wants to see 10% of what they are owed.

Katina is correct--some of these short sale situations are more about the referral business and education than they are about the paycheck!

If I understand your question correctley the 1st is not getting a short payoff, it is only the second that has to accept less. In that case your are right, the rules goverening Fannie and Freddie will not be leverage for you. You will need to negotiate this your commission on this. If you are the lisitng agent there really isn't going to be much you can do since your client will have nothing in the end and you can't breech your fiduciary duty putting your pay above thier financial well being. But you knew this going in and signed a listing to sell the property.
If you represent the buyer hopefully you have a buyer broker agreement specifing a commission to be paid to your brokerage.

Greetings Pam,
If the 2nd mortgage is agreeing to the short-sale you should work with them. Typically the first lien holder dictates the terms of the subordinate's payday. Some 2nd mortgages get a whopping $500 out of a shor-sale situation which is why a lot of short sales don't get executed.

If you pull this one off you are a super agent and I think some of our business is "transactions for the knowledge" meaning you learned more than you earned.

PART of something is better than ALL of nothing. The commission that you seek may just come in the form of referral business. Too many of our kind (Realtors) are paycheck players (Jerry McGuire) and once in a while it's not about the money.

Just think...they guy who's been paying those mortgages is walking away EMPTY handed. OUCH! In short, if the first mortgage is not in default and the second is the only problem and the only one agreeing to accept less than what is owed...they may possibly be able to dictate your commission on their balance.

Just like in pre-license education...ASK THE BROKER...that one is sticky.

Good luck,

Good luck,