I told you so. Agents aren’t required to reduce their commission on short sales.

As far back as my short sales webcast, released almost a year ago, I’ve been telling Realtors that they do NOT have to agree to lower their commissions on short sales. Fannie Mae recently made this crystal clear with announcement 09-03, Miscellaneous Servicing Policy Changes, available as a PDF download on  eFannieMae.com.  From the document:

Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers
Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a
reduction of the total commission to be paid

Here’s the direct link to the PDF (18 KB).

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18 Responses to I told you so. Agents aren’t required to reduce their commission on short sales.

  1. I heard you the first time . . . and believed! Thanks.

  2. Bob Jurgensen says:

    Glad to hear they have come to their senses. In NOVA MRIS was actually playing into the hands of these agents who were revising the commissions by offering an MLS field/code stating the commission might be subject to renegotiation UNTIL WE PUT A HALT TO THAT with a cite of Article 16. They immediately backed off those plans AND comments (in newsletters on the start up screen) implying that this practice was somehow now acceptable. Hope others follow their lead. It seems to have stopped in this area.

  3. Jim Rake says:

    Lem – did we ever doubt you? Thanks for the citation.

  4. Thats is wonderful news. Lets make sure EVERY other lender understands we are the ground force in this effort . We can really make a difference if we all work together to remove this excess of inventory

  5. Latana Locke says:

    This is great news, showing another great value for out VAR dues. Keep up the great work.

  6. Lou Lynch says:

    Not that it is directly related, but I was always fascinated by the expectation of others involved in the transaction that the real estate agent is the one to reduce commission to make the deal work. Never do you see attorneys or title people reducing their fees.

  7. I have had three sales of foreclosures where the banks have tried to lower their MLS posted commission. Not nice at all, what kind of message does that send, Mr. bank is not a honest dealer and as such should not be trusted?? In all three cases I refused to allow my commission to be modified and the properties closed anyway with the promissed commission paid.

  8. Gotta download it first for more info. Thanks anyway.

  9. Lem, great blog. I just started on a short sale, and already the bank is after me about lowering the commission. I said no but they are still bickering about it. I plan to hold my ground as I have with the past couple short sales.

    Nice to see Fannie May finally helping the Realtor in all this.

  10. Brigitte Powell says:

    Ok, that’s nice. How about anyone other than Fannie M how about Ginnie M.? Those FHA loans of earlier years?
    Does this mean I can take that line out of MLS agent notes that says commission may have to be negotiated?

  11. Pingback: NAR presses Freddie Mac on short sales commissions | VARbuzz

  12. Lisa Burrow says:

    Well this is the first step in assisting us in dealing with these short sales. I’m finding many agents still aren’t aware of the change, so we all need to continue to share the links provided on new guidelines to all. I just sent to 2 agents I’m working with that knew nothing about it still.

    Now if we can get the banks to respond more timely. My main complaint beyond the commission negotiations is the time it takes for banks to get back to us.. If I have a buyer that needs a home in 30-60 days, it’s just not going to work. Also, if rates go down, your buyer is now qualified for say a 180K home at 5%, the lender needs to lock for 30 days, well if it goes beyond the 30 days, the buyer loses lock, has to pay to extend, and or loses the approval all together. The timeliness of response is causing problems in this area with the lender on approval, the agents and the buyers. And a buyer sort of needs to know when they actually move in their home..at least a 30 day window. We should be able to be in the position to give them a settlement date, and one we feel sure about..on these, we are just writing in dates and praying they happen. That’s no way to do real estate.

    Help us get Freddie Mac on board, and get the agents answers more timely so we can sell some of these homes. Short sales, not just foreclosures, are also tying up the market. We can sell these homes if everyone will cooperate.

  13. Pingback: Freddie Mac CEO chimes in on short sales commissions | VARbuzz

  14. Peter says:

    Thanks for the great info. Yes Fannie Mae is not reducing commissions any longer however you do have to be careful. Understand that you have a fiduciary responsibility to the seller. IF the bank says reduce your commission to zero to get the deal done and you refuse and the seller is foreclosed on you have not fulfilled your duty of fiduciary responsibility. I am just saying there is no law against the bank negotiating, and although I would fight for my commission I would also agree to reduce it to get the deal done as my responsibility is to the distressed seller!

    If you are doing a lot of short sales I just got involved in the best program I have ever come across. This is not my program or company I just purchased the system from them.

    http://www.shortsalesriches.com/cmd.php?af=938783

    Honestly this program has not only increased my business but has put my short sales on autopilot. Check it out!

  15. Brigitte Powell says:

    I am the buyer’s agent working with a listing agent on a short sale right now Bank of America is the bank and they have demanded that the Listing agent reduce the commission to 4%. Has anyone else found that in dealing with Bank of America or any other Bank?
    Thanks
    Brigitte Powell
    Charlottesville, Virginia

  16. Bob Jurgensen says:

    What was the offered compensation in the MLS? That is what rules! Stand your ground and tell the listing agent that you showed the property based on the coop shown in the MLS – if it’s 3%, then that is your fee – listing agent is of course free to renegotate THEIR OWN FEE but not yours – without your consent, which you should just say “no” to… stand your ground, you have a buyer, they need a buyer. Otherwise it’s nothing less than “bait and switch” and if I recall, it’s a violation of Art 16 (I think that is correct) – at MRIS the ONLY field that rules on compensation is that of the offered compensation which must be expressed as a percentage of the sales price OR a flat dollar amount ONLY. REnegotation of the fee is a matter between the listing agent and their client but doesn’t involve you unless you agree – have your broker call the listing broker and point that out. GOOD LUCK!

  17. Brigitte Powell says:

    Three percent to the Selling broker. :-) I wanted to hold steady, but I guess the worry about loosing the sale for my buyer made me “deal” . She loves the house and demanding my rightful MLS posted commission might well have jeopardized the contract.

  18. Donna Sneed says:

    Well BOA just did it to me again! I am on both sides of a transaction. We get all the way to the end of the negotiations where everything is agreed upon….. Then the negotiator sends me an email telling me I am a dual agent and I can only receive 4% commission not the 6% we agreed on. Here is the email:Attention Agent: Im looking to get this loan submtd today however I just was about to accept the offer to move forward and noticed you changed the commision amount again. Please do not change the commision amount again. The max is 4%. This is delaying the process and I will need to decline the file if it changes again during negotiation stage. Your representing both buyer and seller. That is why the max commision is 4%. Im sending back out the FINAL counter offer that has everything corrected. Please do not change anything and accept the offer so i can get your file submtd to quality today. I have education from 9:30-11am EST and will be back after that. I need you to email me when you are in the office so we can complete the tasks in equator and finally get this loan submtd. Thank you.

    SOOOOOO warning to all if you have both sides of a Transaction…….. DON’T!!! The most irritating part of it is he waited until all the work was almost done then he springs it on me!

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