Can the buyer's broker lower their commission fee to sweeten the deal for the bank in a short sale? Or, is it already written into the contract.

Asked by BuyerShortSale, California Sun Mar 6, 2011

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Bernard Gibbons’ answer
Bernard Gibb…, Agent, Danville, CA
Mon Mar 7, 2011
Perhaps a better question is "SHOULD the broker lower their commission...". As you are probably aware, all of the closing costs in a short sale are paid by the bank and that includes commissions. When a home is listed on the MLS. the commission to be offered to the buyer's broker is clearly stated. Frequently, when the short sale is approved by the bank, one of the conditions of the short sale is that commissions are reduced. This is clearly blackmail to me. "If you want this deal to close for your client, you must reduce your commission".

And people wonder why banks have a bad name!

Bernard Gibbons

Bernard Gibbons, J. Rockcliff Realtors
DRE License # 01331583
Phone (925) 997-1585 -
1 vote
Jerry Current, Agent, Pasadena, CA
Sun Mar 6, 2011
Yes they can. But most banks are willing to pay agents for their services at least 5% total commission (split 50/50).
1 vote
Pacita Dimac…, Agent, Oakland, CA
Sun Mar 6, 2011
Sweetening the deal means so many things to so many people.

The bank will naturally want to minimize their selling expenses and maximize the sales price.

First we try to get the right buyer who stands the best chance of getting his offer accepted. All else will come into place when the short sale process is underway once an offer is accepted by the seller and submitted to the bank.

The negotiators and investors will look at many other factors:
Offer price --- low ball? Within range of market value?
Are there any back taxes and insurance?
Any junior liens? Who else does the bank need to pay off
Condition of the property ----- if there are any safety/hazard issues that will affect getting a loan on the property
Terms and conditions such as requests for repairs or credits from the buyers
Length of escrow period and contingency periods --- the shorter, the better

The agent's sales commission is one of many deciding factors and certainly not THE deal-breaker.

By the way, in a short sale, all terms, conditions, price and agencie commissions are subject to lender approval. Furthermore, any reduction in commissions are generally split 50-50 between the agencies (who then split it further with their respective agents for a 4-way split altogether). So please look at other means to make your offer stronger than merely asking the agents to reduce their commissions.
1 vote
Joni Preston, , Lafayette, CA
Sun Mar 6, 2011
Recently a law was passed that restricted banks from asking brokers take lower commissions on short sales, but I am pretty sure that there are still cases of it happening here and there. The truth of the matter is that a short sale is way more labor intensive than a regular sale, and the agent will earn every bit of his/her commission. It is not fair to assume they should lower it in order to close the deal. Would you do your job for less money if your boss asked you to lower your pay after you had committed to working for him/her at a higher rate?
1 vote
Mike Linkena…, Agent, Jacksonville, FL
Mon May 2, 2011
Yes. In many times, it may be negotiated to appease a lender.
0 votes
Lisa Cartola…, Agent, Oakland, CA
Mon Mar 7, 2011
The bank is the one who actually pays the commission in the short sale. The listing agent is the one who negotiates the commission for the transaction and then the commission is split 50/50 per standard practice in this area.

Short sales can be extremely time consuming and difficult and often agents get paid a pretty nominal amount compared to the amount of time, effort and negotiating skills needed to successfully navigate a short sale. There are many factors involved in successfully negotiating a short sale, and commission is only one part of it. Which bank(s) are involved, what are the terms of the contract that is accepted, how short is the seller, where there multiple offers, and other factors are looked at.

It might be good to find an agent that is familiar with the short sale process and has had success in getting all the information regarding the nature of the short sale to see how best to position an offer. You are hiring a Realtor for their professional knowledge and skills.

Keep in mind short sales can be a frustrating and often sticky situation. The nuances of a short sale change with every property, so having someone to advocate for you to the fullest extent of their abilities is extremely important. Potentially short changing their paycheck (and their livelihood) does not always best serve you.

Hope this helps!

Lisa Cartolano
Alain Pinel Realtors
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0 votes
Gilbert Rich…, , Santa Clara County, CA
Sun Mar 6, 2011
Honestly the Bank sets the total commission to be paid. Secondly, I am sure you wouldn't want your boss coming and negotiating your pay on a daily basis for the same work.

Your realtor works hard without pay until your deal closes. For the best deal, the best way is to make sure that you have a seasoned realtor who knows how to negotiate the best deal for you.
0 votes
Dan Tabit, Agent, Issaquah, WA
Sun Mar 6, 2011
I wouldn't recommend asking for it unless it is already offered as part of the agent’s standard practice. Short sales are often twice the work for less pay already. While some investors don't cut commissions, others do. If your short sale is successful your agent will have been waiting two to three times as long to get paid while still having to manage the details of your transaction.
0 votes
Cheryl Hata, Agent, Orinda, CA
Sun Mar 6, 2011
The buyer's broker can lower their commission to sweeten the deal, but it may not be necessary. There are so many other variables that the bank looks at including purchase price vs asking price, loan to value %, terms, etc. The commission is part of the puzzle and split 50/50 between the brokers but there may be very little to give the brokers in a short sale. Agents work 3 times as hard on a short sale so the decision is up to the agent to agree to a reduction in commission. Price and terms are the most important elements to keep in mind while writing an offer on a short sale property.
0 votes
Lance King, Agent, San Francisco, CA
Sun Mar 6, 2011
the answer is yes. If the offer has already been presented the change would be addressed by a separate addendum
0 votes
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