Banks reducing commission for short sales..

Real Estate Agent with RE/MAX Whatcom County, Inc. WA 24146

Can banks legally reduce the commission paid to each side of the transaction if both agents are with the same broker, or if one agent is acting as a dual agent?

Has anyone tried not letting the bank know the names of the agents, or their offices, when submitting an offer?

If the bank does reduce the commission, after it closes, couldn't the agents have a lawyer send a letter to the bank CEO and Customer No-Service, demanding the difference be paid back, or face legal consequences for interfering with a separate contract between a seller and the agents?

Comments (3)

Leslie Ebersole
Swanepoel T3 Group - Saint Charles, IL
I help brokers build businesses they love.

I think the bigger issue here is with dual agency, not commission. If you do dual agency on a short sale there is clearly the potential for a conflict of interest. After all, the seller is breaking a legal commitment, the promise to pay back the mortgage and there could be long-term consequences. How can you represent the seller to get the best possible terms from the lender (including avoiding a deficiency judgment) and represent the buyer to get the best deal? What would you do if right before the closing the settlement statement changed? How would you represent your buyer if his earnest money was at risk for non-performance if, say, suddenly closing costs were pushed onto the buyer on the final HUD? The seller would be pushing for acceptance, and the buyer would be looking for protection. Murky waters.

Feb 05, 2010 01:01 PM
Stephen Arnold
HomeSmart Elite Group - Scottsdale, AZ

Interesting question...the bank might lean on the agent to take an additional hit on the commission!  I've never worked a dual-agency transaction with a short sale, but with the additional risk the commission should actually be equal to a regular one!

Feb 05, 2010 01:38 PM
Victoria Frieberg
Rush Point Realty LLC, Victoria Frieberg, broker - Rush City, MN
Realtor, Broker, Rush Point Realty LLC

If the buyer is told up front what the seller is willing to accept as an offer, and the buyer then offers that amount, I don't see a conflict.  if the buyer requests that the listing agent make the offer, and the amount has been discussed, agency discussed, and the buyer still requests the listing agent to make the offer..that is their decision.  When a preliminary Hud is presented to the lender, the closing costs and sellers paids are included.  If the lender (s) agree to that Hud..there would be no reason to hold the the buyers money.  With our short sale addendums in MN, the earnest money is not taken from the buyer until there is lender approval..In a dual agency, the commission will be the most likely place all parties will look at to make them whole!

Feb 14, 2010 07:43 AM