In my experience and training with short sales, the lenders ALWAYS ask for a reduction in commission, but if the numbers on the contract are right, just tell them no. Don't be intimidated. They want the deal to happen, too.
It all depends on just how "short" the short sale is. Every bank has a very set bottom line that they can accept in a short sale. If it is crossed, the property than becomes a financially viable contender for repossession and resale. Remember, their purpose in accepting a short sale is to recover more money than they otherwise would if they had to foreclose. If the deal crosses that line, then cuts start coming to make the bank's "walk away" figure go above that line. And also remember, the bottom line can vary both by foreclosing bank and by type of loan (VA, FHA, etc.). For example if the bank can only accept a deal for 80% of what is owed on the loan, then you must back out closing costs, commissions, etc. from your contract price, and make sure it doesn't cross that magic line. If you stay on the good side of that figure, then of course you'll still be asked to cut your commission, but just say no. It's never failed as long as the commission is not over 6%.
As a listing agent for short sale properties, you should get to know your seller's particular bank's rules on short sales. These numbers will telll you if you have a short sale offer that the bank can even entertain. It is not a random decision, but rather a calculated one. Additionally, they all have a certain collection of paperwork (referred to as a short sale package) that should all be turned in together, not piecemeal...unless you want the response to take 4 months, and then have that response be: "the package is not complete, we can't make a decision."
Whether representing buyer or seller, I suggest learning the ropes of short sales with that particular bank. It will save you so much time, effort, and ill will with aggravated clients and colleagues.
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