Foreclosure in San Diego>Question Details

Rick Moving…, Home Buyer in 92009

When working with a broker should I assume the bank will pay them a commission on a short sale or foreclosure?

Asked by Rick Moving West, 92009 Sat Mar 29, 2008

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Clarification on Fred's answer - My understanding is that the case does not apply to all foreclosure properties - It applies to an owner occupied 1-4 units, Notice of Default has been filed property; then an agent can not represent an investor buyer. The reasoning is that the person represents the investor must have a special bond in the amount of twice the value of the property and such bonds are not available in California. The argument is that if the bond is not available, then the requirement is null. We are still waiting for all dust to settle on this - I am not a lawyer, so I don't claim to know when the whole thing will be settled.

Other than the above situation, an Agent is paid commission by the seller according to what stated on the listing agreement (which has to be submitted along with the purchase agreement). However, the reality is that the lenders, while negotiating the short sale, can potentially consider the commission paid by the seller and negotiate on that.

For REO (Bank owned), the seller is the bank, so the seller/bank will pay the commission as agreed.

In general, neither case the buyer pays, unless there is special agreement in place - it's all in the details of the contract. which you should read very carefully - the banks have their own contracts which can be quite different from conventional contracts.

Sylvia .
1 vote Thank Flag Link Sat Mar 29, 2008
Sylvia Barry,…, Real Estate Pro in Novato, CA
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Rick,
The answers given are good, however, a recent Caifornia Supreme Court decision to not hear an appeal of Schweitzer vs. Westminster, should allow agent/brokers to get a commission on a foreclosure property (when listed or possibly with a written offer if not listed). It also should be noted that I have seen commissions of more than 3% for selling agents on REO's and also some agents get less than 3% on Short Sales.
1 vote Thank Flag Link Sat Mar 29, 2008
In general- lenders will compenaste an agent or broker for consumating the sale. Usually the commission is discounted by 50%. Every lender has a different set of proceedures and policies. Each transaction is unique.
0 votes Thank Flag Link Sun Mar 30, 2008
Rick.....

The seller will pay the commission on the sale....either the short sale or a REO (Real Estate Owned) Property.
0 votes Thank Flag Link Sat Mar 29, 2008
Pam Winterba…, Real Estate Pro in San Ramon, CA
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Yes the broker gets paid but the commission percentage in both instances, short sale and foreclosure, is determined by the bank and/or asset management companies handling the foreclosed homes.
All the best,

Laarni
0 votes Thank Flag Link Sat Mar 29, 2008
Yes for a short sale, no for a forclosure. They also make commision on REO's if that's what you mean by "forclosure." In the state of california it is illegal for a broker to collect a commision on a "pre-forclosure investment."
0 votes Thank Flag Link Sat Mar 29, 2008
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