Home Selling in Oakland>Question Details

A. Thomas, Renter in Phoenix, AZ

Short sale rebate to seller in CA?

Asked by A. Thomas, Phoenix, AZ Wed Sep 14, 2011

House in Oakland. I Will short sale under the HAFA program. Is it unreasonable to ask my RE Agent /Broker for a rebate in exchange for the listing? Anyone in CA doing this? BofA is my lender and they will pay the 6% commission.

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The rules are quite simple --- seller will and should not receive any funds from the sale of the short sale, outside of the HAFA relocation assistance IF you qualify for HAFA.

For the work that the agents do to complete short sales, it is unreasonable to ask the agents for a rebate which would not be allowed anyway.

By the way, BOA may ask to lower the commission. Further, your agent doesn't get all of that. Rather, it's split between listing and selling agencies, and the brokers get a cut of their split before the agent gets his. So essentially, that commission is split 4 ways. Still want the agent to pay you for working for you?
1 vote Thank Flag Link Thu Sep 15, 2011
It's not only unreasonable, it's not allowed under a short sale. Short sales take much more work and time than regular sales, up to 3-4 times longer. So, getting the full standard 6% commission for the extra work is more than fair. In any case, lenders will not allow any real estate broker to credit the seller. In a short sale, the seller is basically reneging on his debt obligations and paying less than what is owed. The lender expects to collect the maximum amount possible from the sale of the securing property to cover the debt obligation. That means the seller doesn't get to walk away with any money that could have gone towards the lender's recovery.
Web Reference: http://www.archershomes.com
1 vote Thank Flag Link Wed Sep 14, 2011
With HAFA the seller receives up to $3,000 in relocation assistance. Anything outside of the $3,000 would be illegal. Everyone involved in the transaction buyer, seller, buyers agent, and sellers agent have to sign and notarize an arms length agreement stating there are no agreements outside of escrow between the parties.
0 votes Thank Flag Link Tue May 22, 2012
Do not believe what all these agents are telling you A. Thomas of Phoenix AZ !! They want to make you believe a seller on a short sale can't EVER, under any circumstance, receive a rebate commission at close of escrow AND it be legal. Not true.

Listen to some of these agent's answers. Some are using scare tactics so you won't look any further into it! Why? Because they want to keep as much of the commissions to themselves and not share any of it with you! Alot of these agent's answers include patting themselves on the back saying they're so wonderful and they work so hard and whatever else they can think of to guilt trip you into not looking into seller rebate commissions on short sales.

I'm seller in a short sale that is about to close in two weeks. You need to read the "Arms Length Transaction Affidavit (ALT) that is part of your lender's approval letter package you will receive when a buyer's purchase offer has been accepted by your lender to find out if you're specific lender will allow it. Some do, some don't. Mine does.

US Bank is my lender and within my ALT it states the following, "The seller shall not receive any proceeds from sale of the property unless it is reflected in the short sale terms and conditions" So, my lender is NOT saying I can't receive proceeds, I just need to go about it the way the lender is requiring me to in order to be approved to receive a rebate commission at close of escrow. After I read my ALT, I then spoke to my assigned short sale negotiator. She said yes, it just needs to be disclosed to the lender and the lender will make the call on whether they will allow it or not. If they allow it, she said it needed to be included as a line item on the Final Closing Statement within my escrow closing paperwork

Do all lenders have the same ALT verbage as mine? Of course not. Ask yourself, how can these agents tell you it's illegal if they havent even read the particulars of your ALT? My own agent told me it was illegal but he said that cause he didn't want me to know it was possible and he wanted the portion of the total 6% commission he was reaping from my tragic situation all to himself. But, again, I readily found my answer in my lenders ALT and confirmed it with my short sale negotiator.

Do your homework yourself. I'm working within the guidelines I've been given by my lender. I would provide them full disclosure of the rebate commission by including it in my short sale terms and conditions. And because I'm practically at the close of my escrow, if my agent agrees to provide some rebate commission to me, then we will disclose it to my lender. . My lender will the review it and either approve it or not. If it's approved, it will be included in the Final Closing Statement in escrow. But I have a right to ask according to my lender's ALT and that's exactly what I'm doing. Good luck to you A. Thomas. Look out for yourself on this rebate commission business because you're getting a bum steer from these agents answers on this site.
0 votes Thank Flag Link Tue May 22, 2012
Most likely it will not be allowed by your lender and you, the buyer and the agent will be asked to sign that it has not happened. In addition most states do not allow rebates from agents to clients and those that do, it has to be disclosed and in the HUD . In a short sale most banks will only allow a certain amount of commission, usually under 6 and believe you me, the agent earns every cent for the hastles and extreme work needed to complete a short sale
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Sep 15, 2011
Mr. Thomas, I agree with my colleagues here. You cannot receive any funds from the short sale except the $3,000 relocation allowed by the govt., which is held in escrow until the close.

I just wanted to point out if it hasn't been clear, you the seller are not paying the commission in a short sale. The bank is paying the commission. They are really acting as the seller and will pay for the required Natural Hazards report, all seller closing costs in the process. Your bank/lien holder is paying, not you, even though it is your house until you close escrow. Short sales are a lot of work, so choose an agent carefully who has short sale experience, and hope that the bank does not cut their commission! Banks have traditionally paid either 5% or 6% total. WIth HAFA sales, they are required to pay 6% and are not now allowed to cut the commission.. That is great for all of us hard working agents! Good luck.
0 votes Thank Flag Link Thu Sep 15, 2011
Hi A. Thomas,
Not unreasonable to ask, but as you can see (from the responses below), it will reasonably be denied ;) The rules, laws and contracts are quite clear regarding rebates in short sales to sellers.
0 votes Thank Flag Link Thu Sep 15, 2011
You can get up to $3,000 from the HAFA short sale program, see: http://www.shortsalespeople.com/portfolio_2/how-the-hafa-sho…

However, I do not believe that you are allowed to receive any money from the Real estate agent or any other party in the transaction. The $3,000 may be offered to you as moving assistance incentive from the governmet.

Some lenders offer additional sums, I have seen Chase offer up to $20,000 to close short sales.
0 votes Thank Flag Link Thu Sep 15, 2011
Hello,

As mentioned short sales typically have very specific guidelines and as part of the the short sale and the seller is not to walk away with cash in hand. Typically with a HAFA short sale, the bank will offer the seller relocation costs up to $3,000. Whether this is offered or the exact amount offered can change, so you should work with your agent to determine if this is an option.

The level of work, expertise and time on your agents behalf to complete a short sale is pretty extensive. Hopefully you are hiring someone who is has the expertise and the commitment to helping you navigate the short sale process. In return the commission is the the agent's paycheck for the work completed.

Ultimately the bank is actually paying the commission in a short sale, not the seller of the property.

Hope that helps!

Lisa Cartolano
0 votes Thank Flag Link Thu Sep 15, 2011
Hi, A. Thomas, all other posters are correct. It is fraudelant if homeowners receive any renumeration in a short sale transaction. Your agent will be working extremely hard on your behalf, to get your short sale to close. This is not an easy task. Also I'm curious to know, did your bank actually agree to a 6% commission? Most do not. So your agent will likely represent you for much less commission than you think.
0 votes Thank Flag Link Thu Sep 15, 2011
If and when your short sale closes, you will likely be signing documents stating that no money will be exchanged outside of escrow. Thus to exchange funds for any reason that are not on your HUD statement, would be fraudulent. As previously mentioned here, the bank needs to recover as much money as possible for their loss. I hope your HAFA will be approved and you will get some relocation money.
Web Reference: http://www.tracymcbride.com
0 votes Thank Flag Link Thu Sep 15, 2011
Bill and Tina are both right. Good Luck on your short sale.
Web Reference: http://sellandfindhomes.com
0 votes Thank Flag Link Thu Sep 15, 2011
Tina is right. And why would you want to do that anyway? Its not like you'll be able to gain personally according to arm's length rules. Your agent will be working extremely hard on your behalf. Be nice to him/her.
And good luck on your short sale
BILL
0 votes Thank Flag Link Thu Sep 15, 2011
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