Should Alan get paid?

Alan gets PAID!!!

We have had banks do this and agent stry to cut the commission but, the MLS is a contract for payment and must be met.  Courts have already ruled that way.

Of course, that means you won't be getting any more Christmas cards from Abigshot Realty...

You made me turn my computer upside down.  I am waiting for it to recover before I type....  Here we do have to disclose that it is a short sale or REO, and many times there is a notification that commission will be reduced according to any possible reduction by the lender.  Up front and clear is the best way to go.  I absolutely agree that you should get 3%.

our mls had to address this issue it came up so much.  We GET what's in the MLS

The buyer's agent gets paid what is stated in MLS regardless of what the listing agent collects.

Alan, I don't know what your state's regulations are, but if this were in Florida, you would bet your additional commission.  There was no disclaimer or notice of a possible commission reduction in the MLS, that would be the main reason.

In our MLS, in confidential remarks, we post  "Price, terms, commissions are subject to short sale lender approval; final commissions split 50-50 between agents."

Besides posting the listing as a short sale, there is also a box to check if the commission is variable.

So there's enough information there to indicate that the commission posted on the MLS is not final unless the short sale lender agrees.

And if an agent submits with an offer a statement specifying a 3% commission, I don't sign it because I never know what the bank will allow.

Lately, however, nearly all banks I've worked with on short sales agreed to the 6% commission which we split between agencies.

But this question made me go back and check my short sale listings to make sure I posted something to qualify how commissions may change.

Alan -- that is what we mean by variable in our MLS, and we do post it because some banks won't pay the full commission if the sale is double-ended.

Of course, the answer is YES.

As far as I know, the selling broker has been upheld in artibration in all cases filed here.

We collect the co-op offered in the MLS.  That is the only way the system has any validity or value to our busineess, period.

Unless Alan and his Managing Broker signed an agreement that they would reduce commission, then Alan Gets Paid. 

I consider myself an expert in short sales (Oh Ohhh! Liability time!)

Here is my take on this whole thing:

The co-broke offered on the MLS should ALWAYS reflect what the buyer's broker will make. I don't care what your MLS allows in the comment section or what check box was checked or not.However, my opinion is just that, and unfortunately, does not apply to every MLS (even though it should).

I think the agents are mostly ignorant and are not knowledgeable on how to collect the remainder of their commissions. And no, I don't mean they lack negotiating skills! What the listing agent should do is to counter the buyer based on what didn't get approved on the purchase offer, this includes unpaid commissions. So in this case scenario, the buyer should have been countered 2% of approved price for unpaid real estate commissions.

Regarding "variable commission":

1. It has no bearing in this scenario because the principals involved were represented by two different brokers.

2. A short sale is not a Variable commission because commission agreements are between principal and broker, not principal and their respective foreclosing lender. Unless you (the listing broker) have a variable commission agreement in place, you should not be indicating that this is a variable commission short sale.

Satar

"this has less to do with the short sale, and more to do with 'how is commission communicated'"

I agree and my take is that it shouldn't matter or not if it is a short sale and that the co-broke offered on the MLS should ALWAYS reflect what the buyer's broker will make.

"...and I have to disagree with you, you NEVER counter as part of the contract with commission issues.  They are always separate from the contract."

My take is that real estate commissions are just another monetary obligation (like deliquent HOA dues, home warranty, escrow, title, legal, property taxes, etc.) that the seller has to pay to consummate the purchase contract, but is not able too. Therefore, that cost can be given to the buyer and the buyer can then agree to move forward or not with the purchase of the property.

The entire transaction is being held hostage by the seller's foreclosing lender! Hey some hostages get shot in the process as well.  ;)

Seriously, I looked into this as my commissions were being cut and I had to find a way to compensate myself. Granted, there are certain wording and disclosure you have to give in my state of California, but it is legal, ethical and doable.

Also, the code of ethics state that the buyer's broker cannot use the purchase contract to collect additional compensation for their brokerage, but it doesn't state that the seller cannot use the purchase offer to extract commissions from the buyer. It also doesn't state that the buyer cannot ask for money to pay their broker either. A common example is when a buyer, represented by a buyer's broker, approaches a FSBO and asks the seller to pay towards the buyer's closing cost, which happens to be the money they owe their broker. I guess the logic behind section 16-16 (which I think you are referring too) is that they wanted to make sure the buyer was not put into a bad position because the buyer's broker wanted to be compensated at a higher rate than what was offered.

Standard of Practice 16-16

REALTORS®, acting as subagents or buyer/tenant representatives or brokers, shall not use the terms of an offer to purchase/lease to attempt to modify the listing broker’s offer of compensation to subagents or buyer/tenant representatives or brokers nor make the submission of an executed offer to purchase/lease contingent on the listing broker’s agreement to modify the offer of compensation. (Amended 1/04)

Suggested as a feature as I believe a lot of agents, especially those who do short sales, canlearn from the information provided by everyone contributing.