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Short Sale Commission Reduction - Just Say NO!!!

By
Real Estate Broker/Owner with Kevin Batdorf (Batdorf & Associates, Inc., St. Pete, FL) BK599525

As Short Sales continue to inundate the mortgage industry, lenders are increasingly demanding that Realtors reduce their commission, using the excuse that their policy only allows them to pay X. This is totally unacceptable!!  Our job is to market these properties and get them sold. In my opinion, we are doing the lenders a favor by disposing of these properties before they become a lender owned asset via the foreclosure process. It is our expertise that generates a ready, willing and able Buyer to purchase the property at today's fair market value. The lender verifies the value using BPO's and appraisals.

 

Why then do they seem to always want to reduce our fee for providing this service?  Did WE do something wrong?  The answer is NO!!  The negotiator knows that many Realtors will reduce their fee because they are hungry for a paycheck.  It is time for us to stand together and Just Say NO!! We put too much time and effort into these transactions to have our work devalued and insulted by a lender's demand to reduce our fee.  The negotiation is between the property owner and the lender.  Don't allow the lender to drag your compensation in.

 

By the way, our commission is compesation for marketing the property. Non short sale listings do not include the many (often frustrating) hours of processing and negotiating a short sale with a THIRD PARTY!!  At this time, we do not recieve additional compensation for this added service But I'll leave that for another blog submission in the near future.

Douglas Cartwright
Bankers Life/Colonial Penn - Somerset, NJ

It is getting to a point where the banks feel the have everyone over the barrel B O H I C A Bend over here it comes again!

Aug 06, 2008 02:53 AM
Colleen Fischesser Northwest Property Shop
NextHome Experience - Chelan, WA
A Tradition of Trust in the Pacific NW since 1990!

I have no problem with it. Everyone is losing under these sad circumstances. I feel fortunate they agree to pay us at all. If I weren't ok w/ the  reduction in my fee, I wouldn't take the listing.

Aug 06, 2008 02:57 AM
Kevin Batdorf
Kevin Batdorf (Batdorf & Associates, Inc., St. Pete, FL) - Saint Petersburg, FL

Colleen,

 

They are going to have to pay a fee sooner or later.  If they foreclose, they will pay a fee to the Briker who disposes of the property. And oh, by the way, his fee will never be reduced.  We are in the business of providing a service for a fee. We work very hard to earn that fee.  Try asking the CEO of the lender to reduce his salary and bonus to accomodate the sale - GOOD LUCK!!

Aug 06, 2008 03:06 AM
Shane OnullGorman
Eau Claire Realty, Inc. - Eau Claire, WI
Eau Claire Wisconsin, Real Estate Agent & Realtor- Buy or Sell

Our company just lost $3000 because the bank said no way to paying out the commission.

I don't see any way that we could have done anything about it.

Aug 06, 2008 03:14 AM
Shane OnullGorman
Eau Claire Realty, Inc. - Eau Claire, WI
Eau Claire Wisconsin, Real Estate Agent & Realtor- Buy or Sell

I was listing it as a regular listing before we suddenly had to do a short sale. Why should the commission be reduced now? Didn't I already do all the work? If anything I should get paid more since handling the short sale involved 100's of hours of additional work to ensure it closed.

Aug 06, 2008 03:15 AM
Jonathan Benya
The Benya Group - Waldorf, MD
The Benya Group

Another reason to hate short sales.  I don't want to be stone hearted here, but why AREN'T we simply saying ABSOLUTELY NOT to this so of back stabbing???

Aug 06, 2008 03:22 AM
COMPASS PALM SPRINGS | Stewart Penn
COMPASS - Palm Springs, CA
COMPASS Palm Springs - Broker Associate

Kevin - I agree with you entirely.

I am still unsure as to whether a short sale really benefits the Seller as much as the hype portrays.

Aug 07, 2008 12:03 PM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello Kevin,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to ya!

-Keith

Aug 18, 2008 06:47 AM
Donald Apelian "Short Sale Specialist"
Meridian Financial / First American Financial - Saint Petersburg, FL

Hi Kevin - I represent a company, "Save Our Home From Foreclosure", right here in Pinellas County, and we work with Realtors to prepare short sale packages and negotiate offers with the lender. So far we have an 85% success rate and while some lenders will ask for a reduction in the Realtors commission, we have seldom seen that reduced to less than 5% when there are two Realtors party to the transaction.

If you are presently engaged in any short sale negotiations and/or listings that you would like to discuss with me, please feel free to contact me. I'll be happy to provide you with recommendations and testimonials upon request. 

Aug 18, 2008 08:00 AM
Kevin Batdorf
Kevin Batdorf (Batdorf & Associates, Inc., St. Pete, FL) - Saint Petersburg, FL

Erica - Fidelity National Title Insurance Company is reporting that a foreclosure can reduce your score by as much as 250 points.  On the other hand, they also state that a short sale or deed in lieu of foreclosure reduce your score by up to 125 points. That seems to me to be a significant difference.

 

Donald - Thank you for the offer, but I have a very good system for preparing short sale packages and negotiating with the lenders.  I too have a high success rate - I've lost only one, and that was due to the Seller's attorney advising him to let it go to foreclosure, even though a negotiated short sale agreement was in place. Otherwise, I have a 100% success rate (so far).  By the way, does the lender pay your fee or is it the seller or the broker?  And does your fee appear on the HUD 1 as a separate line item?  The point of this blog is that we as Realtors perform a service by marketing and selling the property.  Many time, the property is more difficult to sell due to the state of mind of the Seller who is losing their home.  We deserve a full commissin for a full time job of keeping the property off the books of the lender's reo division!!!

Aug 18, 2008 08:53 AM
Donald Apelian "Short Sale Specialist"
Meridian Financial / First American Financial - Saint Petersburg, FL

Kevin - the fee chraged by SOHFF is 1% or $2,500, whichever is greater. This fee is paid by the seller (lender in this case), and appears as a separate line item under seller's costs.

I am in full agreement with you regarding your efforts and commissions earned, which is why our company was started. Our President's wife is a local Realtor and when he saw the success she was having marketing and selling short sales utilizing his program, he decided to expand the business and offer these services to all Realtors in Florida.

We now work with two of the largest Realtors in Florida who are very satisfied with our program. After all, wouldn't you rather be listing and selling homes and not engaged in time consuming and often frustrating negotiation process with loss mitigators?

Aug 19, 2008 01:35 AM
Bob Cumiskey
A1 Connection Realty, Inc. - Sun City Center, FL
US Army Retired, Your Sun City Center, Florida ~ Realtor

If everyones sticks to their guns on this issue, the banks will have no choice.  But, unfortunately as you stated, there a too many "hungry" agents still out there.

Aug 19, 2008 02:04 AM
Starstate Realty
Starstate Realty - Austin, TX

Hi Kevin  - Happy New Year.  Welcome to ActiveRain. I look forward to networking with you and reading your future post. Have a great day!!!

Jan 11, 2009 02:51 PM