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Short Sale commission not paid on purchase price

Here's a good one for you!

I've been working with a Short Sale Seller in getting a purchase contract approved. Here are the details:

Original purchase contract price at $84,500 cash
That's it...very simple; good ole cash
Lender, Wachovia, countered to $87,000
Buyer accepted and happy at fabulous "on sale" value
Seller happy as they're avoiding foreclosure

Written approval letter comes through:

Wachovia will pay commission on original offering price of $84,500 not final agreed upon price of $87,000.
Listing Agent (me) and Buyer's Agent fit to be tied.

Where is Wachovia coming from? Let's just see how we can slap a Realtor not providing them any respect for their profession and just cut the commission to what price and percentage that we feel like paying on any given day. Can you believe it? Not even agreeing to pay on the final agreed upon purchase price.

I've been going at them trying to get a response and so far no luck. I will not quit as the closing isn't scheduled until July 27th but I just had to see if anyone else has been faced with this latest illegal activity as it is illegal in my eyes or is this a first? These Lenders are just pushing it too far. Unfortunately, this isn't a Fannie Mae for its up to 6% commission guarantee as it is a Freddie Mac that I haven't seen to have followed Fannie Mae guidelines yet.

I will let you know how I resolve this.

The more you know, the better prepared, the better the outcome.

I serve Coral Springs and the surrounding cities such as Coconut Creek, Parkland, Sunrise to Southwest Ranches in Broward and Dade and Palm Beach Counties of South Florida as your dedicated Realtor and CDPE Certified Distressed Property Expert ready to work for you. I'm looking forward to hearing from you soon. Please call me at 954-464-1100 or email me at: lynnp@ImagineYourHouse and it would be my pleasure to help you!

Learn more about Short Sales in South Florida

Learn more about me and Coral Springs Real Estate as your Coral Springs Realtor

The more you know, the better prepared, the better the outcome.

I serve Coral Springs and the surrounding cities such as Coconut Creek, Parkland, Plantation, Tamarac and Sunrise in Broward, Dade and Palm Beach Counties of South Florida as your dedicated Realtor, Short Sale Specialist and CDPE Certified Distressed Property Expert ready to work for you.

I'm looking forward to hearing from you soon. Please call me at 954-464-1100 or email me at: lynnp@ImagineYourHouse and it would be my pleasure to help you!

Learn more about me and Coral Springs Real Estate as your Coral Springs Realtor

Posted by Lynn Pineda-REALTOR® Coral Springs FL Short Sale Specialist on 07/12/2009 02:39 PM

Comments (19)

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19 Comments on Short Sale commission not paid on purchase price

JUL

I am curious to see how this ends. I bet if we decided to only pay a percentage of the bank fees we are charged they would not like it so much (and then it would go on our credit report).

We are seeing alot of "commission paid not NET sale proceeds" - to WHO? the seller? the bank? what the heck.....??? I will be monitoring this to see the many answers

I want to wish you luck on this Lynn...I just showed a property that was bank owned the other evening...it did mention in the notes to agent section of the MLS that the brokers commission was subject to bank approval. I'll be interested to see how your situation turns out...unfortunately for you; I'm betting I know how it will go---

Lynn, I haven't experienced anything like this...I hope you get this resolved and quickly! The best to you!

Be sure to some back and post as to how it come out -- I can imagine that it will not likely go the way you want-- it is impossible it seems to fight these banks.

Lynne, That is a strange counter. But the good thing is that they have accepted the short sale! The difference in the commission is $75 split several ways. I would move towards closing and not give it another thought. Better yet...have the seller pay it. Wachovia CAN limit what they are willing to contribute towards commissions but they can't alter your listing agreement. Get it from the seller. They are the ones the obligated to pay your commission not the bank.

Kari, oh, you're right. The Lenders wouldn't think of having to reduce their fees would they.

Valerie, yes, I was shocked at their attempt to pay a commission on an arbitrary amount really. As commissions are paid on purchase prices. If they want to reduce a commission than express it as a percentage of the purchase price.

Faith, yes we know when working short sales that the commission to be paid is finalized by the Sellers Lender, unless of course if it's a Fannie Mae loan. But by all means, that doesn't mean that I will simply lay down and take what they dish out without an attempt to be paid for what I brought to the transaction. I work extremely hard with my short sales and have gained 100% approval on all of my short sales and that is because I don't cave with the first "no". I will fight with all I have for my Sellers and I want to be paid for my efforts. My files presented to my Short Sale Lenders are very thorough.

Lynn - I haven't seen this yet. I personally predict that banks will start offering to pay a flat fee towards real estate commissions. In my state of CA, some lenders are hitting the title and escrow fees to a flat number. Something I haven't seen before.

I agree with Bryant. There is nothing illegal about this. You have a listing agreement with the seller (not the bank) and the bank simply states what portion (if any) they will contribute to your commissions. I personally don't see how you guys make a living on selling 80k short sales by only charging 6%. The time and effort put into it equals a paycheck from McDonald's! Maybe you guys should charge a flat fee as well and pass off the cuts onto the buyer. Maybe charge a flat listing fee of 10k and offer 3k to the buyer's agent on your MLS. Pocket the other 7k.

Good Luck!

Wanda, this is a first for me too.

Bob & Carolin...I know that the deck is stacked against me but I will attempt for them to see the light.

Bryant, oh you're right as an approved Short Sale is the ultimate end result. However, I still feel that it isn't right for the Lenders to simply pay whatever they feel; in particular to pay a percentage of a dollar amount that isn't even the purchase price. At least, do their math and compute it against the purchase price....I think my anger would be less had they done that. They're wanting to pay 5% of $84,500 instead of 6% of $87,000. Sure, I could go back to the financially strapped Seller to get them to pay, but I don't like to do that. Sure some Short Sale Sellers have more $'s than other Short Sale Sellers but the majority of mine are truly hurting and I just can't kick them when they're down. I wouldn't be so annoyed if they said they would be paying 5% of $87,000 but they're simply trying to pull a fast one in my eyes and they're currently not even having the guts to explain it!

I wish you luck!! I'll stick around to see the outcome!!

JUL

Lynn - It almost sounds like a lazy negotiator...

Sergio, I'll certainly take your well wishes and I'll be back when I get some news....promising news, I hope!

Wendy, this is a lazy bunch all right to put it politely!

JUL

It sounds like a negotiator that is paid on performance. It is a cheap shot after the fact. Makes you want to take the cash to another property and let the lender enjoy owning the property themselves after they foreclose on it ... for the sake of paying a professional to help them avoid it. Stay the course - talk to a manager.

JUL

LYNN,

Have you tried submitting the HUD with the full commission. I bet they wouldn't even notice such a ridiculous detail.

JUL

I have not yet run into this, but am not surprised. I have seen a couple of commenters suggesting that you get it from the seller. It's worth a try, but often the banks will stipulate that any contribution from the seller goes directly to pay down more of the mortgage.

Regarding Freddie Mac, I had one recently approved for the full commission up to 6%. I thought they were following Fannie Mae's footsteps, but then I noticed that this bank was approving another number.

Good luck with the short sale!

Robin, never a dull moment with a Short Sale. We need to always expect a new surprise don't we?!

I did an update to this post and thank goodness Wahovia decided to pay my commission on the actual purchase price - thank goodness!

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Lynn Pineda-REALTOR® Coral Springs FL Short Sale Specialist

Coral Springs, FL

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