Usually in a shortsale or a bank foreclosure the commissions are paid outside of the usual contract with a seller. The bank pays the commissions, not the seller. I hope there is a good negotiator involved to get the flow of communication open with the bank, and to make sure the bank has all of the required documents they need. Good luck, but I would find out how the commissions are being paid before I started paying your agent. Check with the listing agent to see if the file has been assigned to a negotiatior and see what the negotiatior submitted to the bank.

Typically on a short sale the BANK ends up paying the brokerage fee ~ Not the Seller ~ there is typically an addendum that accompanies the contract that states the seller will pay ZERO at the closing of the short sale therefore the bank absorbs all the costs, therefore the SELLERS AGENT should be receving an enough of a brokerage fee to 'split' with the buyers agent (your agent) to cover the buyer agency fee you are obligated to pay. http://www.WeMoveNH.com

When you engaged a realtor to help you -Did you sign an agreement to compensate the agency 2%? Did the agent explain how real estate works? Typicaly the Seller (BANK=in a short sale), compensates the agency for bringing a ready, willing and able buyer. The Buyer is not typically expected to pay real estate commission fees, but Failing which - it becomes the buyers obligation & included in closing costs. All of this should have been disclosed from the beginning. Explaining how real estate works is SO important. The lender in a short sale should however compensate the agency in the transaction if they are well versed in negotiating.

Usually, in a "normal" transaction, your agent's fee would come out of the commission the seller pays. However, this isn't a "normal" transaction. First, the seller doesn't have the funds. Second, lenders usually pay a reduced (sometimes severely reduced) commission--let's say, for example, 3% rather than 6%. That, in turn, gets split the regular four ways: listing agent, listing agent's broker, buyer's agent, and buyer's agent's broker.

That results in very, very little compensation for your agent.

Meanwhile, there's a lot more work that goes into a short sale transaction than in most regular transactions. So, on a $300,000 transaction, for instance, your agent's commission might be $750. (1/4 of 3% of $300,000) Not much.

The 2% seems fair to me. However, I can understand that it could bother you. In that case, you have a number of options.

Hope that helps.

In a short sale the seller is not ultimately paying a commission, it comes from the bank, the bank will allow a reasonable fee to be paid to a realtor. What is not known is your buyers agent also the listing agent? The listing agents job would be to fill out a form outlining what the bank will ultimately get after all expenses including commissions and closing costs. Any broker that does a short sale should be very well versed in doing one and have also already successfully completed at least one so they know what it entails. It is not easy, it does take a long time, but to get it to work, is worth all the effort. I would not charge the buyer extra as it is part of the job when doing a short sale. I know from the start it will take more time and i will probabily make less. So i dont pass that on to any buyers. Unfortanately if you agreed in a buyers agent form to pay it, you will have to pay it, if he /she has asked after the fact, than no, you do not have to agree to it. Good luck in your purchase, if you have any specific questions check out the short sale page on my site or email me directly.

Real Estate is always the art of negotiation and prices may continue to FALL. Agents are not making that 6% that they had become accustomed to in the "good old days". Short sales are no easy transaction and if after you have researched this buyer agent's ability to provide all the guidance allowed, it may be worth it. Be prepared to WAIT as lenders are sometimes slow to provide their approval.

Please remember that by law, Agents cannot and will not give you legal advise. Be careful to have your agent advise you of all the additional expenses that you will pay above this commission and above your down payment and escrow fee. You may have an inspection fee, appraisal fee, doc fees, loan points, recording fees, loan app fee... It may be wise to know this prior to your agreement to this 2% fee.

Good Luck
Hawaii Guy

SORRY TO HEAR WHAT HAS HAPPENED. as other agents answer your buyers rep agreement governors what takes place. In some instances our office for short sales/foreclosures if agents fees end up less due to the bank not willing to pay full commissions.... we waive our "shortage fees" less time than difficult situation between a client and agent.

Seller does pay the agents fees unless the agent is short then the agent ask the buyer. HOWEVER if a seasoned agent is showing short sales, foreclosures realtors know we will not be earning full commissions at closing from the seller.

http://www.lynn911.com http://www.homes-for-sale-dallas.com

Hi Alyssa,

The seller very likely has no money...typically, depending on the deficiency the lender is looking at, if it is "with reason" as judged by the lender, the lender will pay the co-broke fee to your agent, but your agent has every right to negotiate her fee with you which should have been negotiated at the time of you signing a buyer's agency agreement with her. I have been through a short sale and believe me, you WANT a motivated agent working for you, because there is a LOT of extra work, even on the BUYER's end of things... she is working to get you the best price she can and both the lender and the seller want YOU to pay MORE for the property. The threat of foreclosure may be looming and that does not necessarily mean, in fact it may be somewhat UNLIKELY to mean that you would be able to get the house at an auction because at that point there are other parties in play...your agent has a lot of work ahead of her to a) get the transaction to close for you period b) get it to close at a price the lender, the seller, and the buyer can agree on. You could say (if it is the case that this commission was not negotiated at the signing of the buyer agency form/contract) that now (later) it is being introduced (again, I do not know the exact details) that she must honor the exact contract signed...but that seems counter productive. She wants to get paid for the hard work she will be doing for you. If it does not close, you will not be paying her unless you have arrived at some flat fee arrangement

When you engaged your agent to be your "buyer agent" you agreed to pay the agency fee. Normally that fee is "reimbursed" by the seller, so there is no out of pocket cost, but in a short sale the seller is selling because he can't pay the mortgage and--probably--can't pay your agent either. It's nice to think that someone would pay for your agent to represent you, but in a short sale that's pretty much pie in the sky.

If you really don't want to pay your agent for representing you, tell him/her right away so they can cancel your deal immediately.