We recently had a offer that was approved short sale by our lender. The advised the realtor she need to cut

Asked by Midnights In Michigan- LS, Lake Orion, MI Fri Jun 6, 2008

her commission from 6% to 2 % as she was the buyer & sellers agent. She walked away from the deal! - If any one is interested bring me a buyer - the deal is ready to go & Approved by the bank - Lake Front / http://www.zillow.com/HomeDetails.htm?city=Lake Orion&state=MI&zprop=24353207&s_cid=emo-posting-homeaddress

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Jerry LeGris, , 93704
Sat Jun 7, 2008
It is quit interesting that the banks think they can automatically cut the commission. The listing (agreement) contract is between the seller and the listing broker...not the bank. Remember the bank does not own the property at this stage of the game...not until they foreclose and take legal ownership. The bank is interfering with this legal contract. As brokers we always try to help our clients the best we can, but must be able to operate our business also. Best suggestion to the bank is to increase the price they will accept by 2% to 4% to pay the agreed broker compensation. Many agents don't even want to show or deal with Short Sales anymore based on the banks improper handling of this situation that they really have no right to change.
1 vote
smith3gary, Agent, White Lake, MI
Sat Jun 7, 2008
L, Please read your contract before considering contacting the agents broker. All of your choices and rights should be spelled out in the contract. I would especially review the part about protection period.

I would also agree, just because the bank has accepted this offer at price and terms does not mean it will be offered to the next buyer. I would try to get the transaction closed with the buyer your agent brought if at all possible.
Web Reference:  http://www.mi-living.com
1 vote
Michael Parks, Agent, Las Vegas, NV
Fri Aug 24, 2012
That's a very significant commission cut. I've never seen anything that sever before. I would have personally tried to re-submit to the bank or re-negotiate with them. However, in reality there's no way I would drop a client over a commission reduction in those circumstances. I completely understand how she would be very upset after she's put in so much hard work to not only sell the house but to also negotiate the short sale with the bank. I negotiate short sales all day long and it's extremely time-intensive and very stressful. However, it's not your fault that the bank reduced the commission, so leaving you without representation is not a very classy move on the Realtors part.

At the end of the day real estate is a very tough profession to be in; there's a lot of work and often times very little compensation. Although if you take good care of your clients you will be rewarded many times over with referrals & repeat business. I'm sure you'll find another local agent that would be willing to jump in and basically take a free ride at the reduced commission. Since all the work is basically done, it's not a bad deal for the next agent. Good luck on that one. BTW: what bank or banks are you working with on this short sale?

Michael Parks
Broker (CDPE, CSP)
http://www.LasVegasHousingExperts.com
702-818-1700
0 votes
Michelle Sch…, Agent, Clarkston, MI
Fri Aug 24, 2012
How did this end up working out for you?
0 votes
donyale maho…, Agent, birmingham, MI
Sat Mar 21, 2009
It's typical for the banks to ask the agents involved in a deal to cut their commission. I've done several short sales this past year and most often have seen the cut take .5-1% off each side. Because your agent had both ends of the deal, they gave her what they might typically pay an agent on either side of the deal. However, in her defense, she handled the work of two agents and I'm sure that she felt that she should have been compensated a bit more, not to mention the paperwork and time spent on the phones with the bank. It's absolutely daunting to deal with the banks. I wonder if she tried to negotiate her commission or went to her broker. When we were at an impass with one particular bank, my broker stepped in and we were able to come to an arrangement that benefitted everyone. I'm sorry about your deal. Make sure that you discuss this possibility with the next realtor and put in your remarks that "commission rate is based on 3rd party or Bank approval." When I offer a property for short sale and receive an offer, I have the other agent sign an addendum stating that he/she has been made aware that they bank may negotiate the commission rate. It's better to be honest up front and it alleviates some of the headaches later.
0 votes
Keith Sorem, Agent, Glendale, CA
Sat Jun 7, 2008
Dear Midnights
In the world of shortsales there are many interesting twists and turns. It is important for all of us to realize that banks want to take over real estate. You might find it interesting to know that the only real estate agents in the United Kingdom work for banks. This is a preview of what the world would be like if Realtors did not exist, and banks took over.

Second point here is that there are MANY cases of banks and lenders stipulating exactly what the terms and conditions of the sale may be. In our area it is not recommended for Realtors to conduct both sides of a transaction in general, however even if two Realtors from the same brokerage, even just the same BRAND, which may be actually under different BROKERS (meaning no legal relationsihp), lenders are playing hardball on fees, including commission.

Before blaming the Realtor or broker for problems, realize that for the lenders this is business. It sounds to me in your post that you are selling on your own and this Realtor was going to represent the buyer and you, but she brought the buyer, is that correct?

Here is a heads up: Most lenders involved in short sales insist that the seller use a Realtor. Why? Because if this is a true short sale, the BEST decision is for the lender. That means that after careful examination of the FACTS, the lender thinks they need to sell the property to avoid a llarger oss.

So, if a lender will agree to let an owner sell their property without professional representation, what does that tell you? According to NAR statistics, owners selling without professional represntation list with a Realtor 86% of the time. So if the owner is in danger of foreclosure, that means that time is of the essence. Why would a lender allow an owner to sell by themselves, then, when there is an offer, cut the commission to the point where the buyer walks away?

Could it be that they truthfully want to foreclose? Aren't you as the owner worried about having a foreclosure on your credit report?

I am very concerned about this situation, and the truth is, if the lender does not want to do a short sale, they can make it so hard to conduct a short sale, while paying lip service to the idea, that after they issue the notice of default, you could simply run out of time, and there is absolutely nothing you can do about it.

I suggest takling with a Realtoir with experience in short sales to learn your options
0 votes
Scott Sowles, Agent, Troy, MI
Sat Jun 7, 2008
I agree with Patrick. Purchasing is an emotional decision. When a buyer makes an offer on a home, in many cases, they're beginning to become emotionally attached to the home. The fact that the buyer walked away indicates there may have been a problem there from the beginning.

To me you situation seems to indicate that your agent didn't know much about short sales. Banks are ripping off Realtor commissions left and right on both short sales and foreclosures. If you'd done a number of short sales you know that you need to be careful when trying to double-dip a transaction - instead you have another Realtor represent the other party for a % of the commission. this forces the bank to pay a more reasonable commission. Clearly part of your problem stems from the fact that your Realtor wanted/needed to get paid (I heartily agree). Unfortunately your agent may not have heard about how banks try to clip the Realtors commission - especially when they try to do both sides of a transaction.

I agree with the others - contact the broker. I haven't seen this explained yet so I'll give it a shot for you. While the listing contract you signed mentioned an agent, and as most clients do you probably thought you listed your home with this particular agent, you didn't list with an agent. You listed your home with the broker your agent works with and, in a legalese paraphrase, the broker assigned your agent to you. Technically your complaint lies with the broker your agent works for - they may be able to assign a more knowledgable agent that can help you - perhaps before it's too late~
!
0 votes
Mr.P, , Arizona
Sat Jun 7, 2008
Before anyone contacts the Department of Real Estate, or even the broker. Look at the big picture.
THE BUYER WALKED AWAY!

Anyone who has played Buyer`s agent knows....
If the buyer wants that house and can qualify, they will buy that house. The buyer doesn`t care how much commission anyone is getting. Even if there is a Buyer broker agreement, and the buyer has to come 2% out of pocket. Typical is the buyer will renegotiate with the buyers agent.

Nothing against midnight here.
What Realtor in their right mind would go 10 rounds with a bank in a short sale, just to walk away over a few thousand, and, and, and Admit that they are walking away over the commission.
0 votes
Sam Bugeja, Agent, Northville Township, MI
Sat Jun 7, 2008
I would suggest having your agent contact the bank. The commission is negotiable with them. In a similiar scenario, I was able to get the bank to pay 4%. The bank wants the deal to get done as much as you and the buyer do.
0 votes
Michelle Gor…, Agent, Ada, MI
Sat Jun 7, 2008
I agree with Cindy, contact the broker IMMEDIATELY! Just because they aproved for one person the sales price their tune may change as time passes!

I was cut to 2.5 percent on my last short sale, did not even blick an eye to go forth, it was the right thing to do for my client.
0 votes
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