Challenge the "Required" Commission Reductions – Short Sale Success

Challenge the "Required" Commission Reductions Short Sale Success

It has been customary for lienholders to require a reduction in realtor commissions in short sale transactions. The obvious motivation is to increase their net proceeds in the sale. Their justification is that because they are taking a loss, they are asking for all financially impacted parties to also share in that loss, which for a realtor means accepting a decrease of commissions paid.

When there is a standard commission rate of 6%, many banks automatically place a cap on realtor commissions at 5%. There are even cases where some lenders are more aggressive as they demand even more commission reductions. This practice has proven to be counter-productive, as Realtors are asked to work harder on short sale transactions, that ultimately pay less when the transaction is completed. It definitely makes more sense to avoid taking short sales altogether, and concentrate on retail transactions where the full commission is available.

Despite this, Realtors choose to do short sale transactions for a variety of reasons. In this economy, the willingness to include short sales represents an income stream available to those willing to invest the time and energy. Some are contacted by previous clients who are no longer able to afford their homes. Others want to handle these transactions as their way of offering their leadership to the community, and play a large role in helping to solve the foreclosure crisis in the neighborhoods where they have invested their time and energy.

While reductions in short sale commissions are commonplace, they are not always required. For example, the servicing guidelines for Fannie Mae loans no longer require a commission reduction as a condition of approving a short sale. In the Home Affordable Foreclosure Alternative program, if a homeowner loan is qualified, lenders are not allowed to reduce the commission stated on the listing agreement (up to a maximum of 6%).

Even outside of these government programs, there are a few enlightened lenders who understand the work involved in marketing and selling a home that requires a short sale. These lenders allow the full commission to be paid, and are genuinely interested in selling the property and recovering their funds as soon as possible.

Our recommended best practice is to always remain current with the lender trends especially in the area of allowed commissions. Keep up to date with available government programs or servicing policies that permit full commissions to be paid. Ask the questions:

"Is this a Fannie Mae loan?"

"Does this loan qualify for HAFA?"

"What other available programs pay full commissions?"

Look out for our future blogs/articles from our Short Sale Leadership Series content.To view our blog updates, visit www.whbsolutions.com/blog.

POST COMMENT

England boss Martin Johnson annoyed by loss to Maori, England v Samoa rugby Actual Facts Regarding Livestrong Bracelets Distinguishing Ds3 From T3 Bowtrol - How Safe Is It? What Really Causes Blanket Weed? The Benefits of Blue Pond Dye Water Heater - Know All about It The Amazing Speed Of Ds3 Chiropractors might be Personalities? How to Deal With String Algae Sherry Brescia Great Taste No Pain-Your meals can cure your ailments Different Types Of Farms El Chupacabra Monster