I have worked directly with banks as both Short Sale Broker and to help them negotiate with delinquent owners.
The bottom line is the bank pays, since there is more owed than proceeds... the bank will approve the HUD which includes the commissions. A Few important items:
- The banks may reduce the commission, so the agents beware. It is why almost all Short Sales need to say " Commission Subject to third party approval "
- An atty should help prepare the package to the bank... if an incomplete HUD is ( Finally! ) approved by the bank and other items are discovered ( liens, fees, taxes etc ) .. then the banks approval is no good.
- The seller should only sign a realistic offer. The banks are so swamped with these that it may take weeks or months for them to process, get appraisals, BPO's etc. They are not interested in a negotiation. Many sellers sign a super low offer because they don't really care ( it's not their money... right? ) or some predatory " Investor " figures they'll take a shot. It's really setting themselves up for failure.
The instructions from a bank for a SUCCESSFUL short sale is:
- Only sign a realistic offer, that is likely to be supported by the banks independent review
- Send a complete HUD with all costs associated
- Send in complete seller papework, taxes, acct statements, hardship letter etc.
If the above is done... short sales are easy and successful. Most of the time it's not.. and that is why short sales fail.
If you are interested in discussing further with an experienced local broker ( My office used to be on S Main ) .. please contact us at direct: 617-755-8272 or Mike@SuccessInMass.com
The commission is paid by the seller's bank. There should be no fee's comming from the seller since the seller is in hardship. If you would like more info please feel free to contact me. I'm very familiar with the Randolph market, especially since I lived there for 10 years. Best of luck.
It is actually no different from a normal real estate transaction. Of course there are other circumstances that are involved.
In a typical real estate transaction the commissions are predetermined in the listing negotiations. Now the difference being is if say the buyer's agent has an agreement that they will receive a set fee/percentage from any deal they help them obtain. Now this means that if the short sale is only offering 5% total so 2.5% and 2.5%. Now if the buyer's agent say had an agreement for 3% then they may look to their buyer for the other .5% commission.
Now any commission is to be approved by the banks involved in the short sale. In most cases with such loans like FHA/VA they are not allowed to negotiate commissions below 6%.
Hope this helps,
I am a CDPE ( Certified Distressed Property Expert) call me or email me if you have other questions.