Can Banks Cut Your Commission on a Short Sale?

April 13, 2010

Residential

Can Banks Cut Commissions

Can Banks Cut Commissions

Given that this is by many accounts “The Year of The Short Sale,” I plan to share my experiences with my peers and the public to shed some light on what Realtors go through when working with this type of transaction. As a listing agent I recently had a short sale accepted by the bank which is a huge milestone in the process. I was excited until I found out that the bank accepted everything about the contract except for my modest 6% commission which they slashed considerably. Six percent is what I felt my efforts to see this process through to the end were worth, and since my client agreed we signed the listing and three months later we have the bank approval largely from my daily efforts to manage the process and keep everyone on track. Anyone who has successfully navigated a short sale will know this is no small feat!

Commission Reduction Appears to be a Must

The commission reduction came as a bit of a surprise as many
agents and attorneys tack on a huge fee for managing short sales and I asked
for none. It was also a bit surprised given that I have a legally
binding contract and at no point during the three months that they had
the file, including a month of negotiation, did they ever mention the
commission. Even though I have a signed contract by the buyer and
seller the trick is that the bank is the one paying the commission, not
the seller or the buyer (unless you work that out ahead of time). I
confirmed this fact with a few real estate attorneys and their advice
came with a warning. “While it is acceptable for an agent to stand
their ground on the commission issue, it will almost always result in
the bank canceling the deal.” Their advice: “Deal with it, and move on
to the next one.”

If You Don’t Ask for it, You’ll Never Get It

Not all banks are going to negotiate the commission as long as it is reasonable,                                          therefore my advice is . . . ask for more than what you want, say 7% or 8% in
anticipation of the bank slashing it. Keeping in mind that you may not get
what you asked for. To quote the vernacular, “If you don’t ask for it, you’ll never                                 get it.” In sales and in life, I find truth in this every day.

We would like to thank Boulderite for kindly sharing today?s photo via the Creative Commons License.
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About Randy Whiting

Randy Whiting is a respected Chicago real estate agent at Lucid Realty a full-service brokerage that offers discounted commissions to sellers and rebates to buyers. With plenty of experience on both sides of the transaction and all type of sales be they conventional, FHA, short sale, or foreclosure; Randy has an experience-driven comfort level that usually rubs off on his clients. In addition, his experience working with developers allows him to provide an in-depth understanding of new development and gut-rehab properties as well as re-sales. Outside of his work as a realtor, Randy spends his time writing and performing music and enjoying the outdoors as often as possible. You can contact him at RWhiting@LucidRealty.com

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