Aug 29 2009
Short sale commission negotiation
New Freddie Mac policy will help real estate agents obtain "reasonable" compensation for short sales. Effective Aug. 1, 2009, Freddie Mac states:
Unless a real estate broker's sales commission exceeds 6% of the property sales price, Servicers must not,
as a condition of the Servicer's acceptance of an offer, renegotiate the real estate broker's sales
commission to an amount that is lower than the amount that was originally agreed upon between the
broker and the Borrower. In the event the sales commission exceeds 6%, the Servicer must renegotiate the
commission to limit it to 6% of the property sales price.
Click here to view news release in its entirety.
Prior, rarely did a lender allow more than 5% comission to be shared by cooperating brokers, but often any shortage not anticipated when the approval process began then fell to the agents to pay out of comissions. Basically, if your short sale took 6 months from submission of offer to close of escrow, and the seller accumulated expenses and debt against the property during that six months, any expenses not made aware to the bank at the start of that 6 months wouldn't be provided for or authorized by the bank. For example: On a $500K transaction, if the bank limited the commission to 2.5% maximum, this allowed a $12,500 maximum commission for the agents to share. Then, if the sale expenses/debt exceeded the authorized net by $5,000, either the transaction could not close or the agents sacrificed $5,000 of their commission.
There still may be deficit on short sales, but with the ability to obtain a minimum of 5 to 6% commission per transaction, it definitely helps agents successfully close transactions and remain in the black.
