Subscribe via RSS Feed Connect with me on LinkedIn

Short Sale Commission Squeeze

This just in from the Short Sale Trenches…

In several of our recent Short Sale Negotiations the lenders have been trying to squeeze the commissions paid to real estate agents on the short sale out of the transaction and HUD-1.

In particular, when we were buying under an LLC or other entity that was obviously an investor buyer, the lender tried to refuse to pay any commission based on the argument that “the agent did not do any marketing for the property”.

Nice try!

Here’s how we countered and got the commission approved: We pointed out to the short sale lender that real estate commissions are not “marketing fees”, but they are paid for representing the buyer and/or seller as a licensed real estate agent.

Since there are serious liability issues attached to agents representation, we asked the lender to check with the board of realtors and the state association of realtors about the liability they are getting themselves into when they force the seller and/or buyer in a short sale transaction to be without agents representation.

As I mentioned before, we got the agents commission promptly reinserted into the HUD-1 and approved for the short sale.

Are you running into similar issues with ridiculous demands by short sale lenders?

I’d like to know about that! Please feel free to comment on this story and share your own experiences below.

Talk soon!

Thomas Bartke

You may also like these posts:

Tags: , , , ,

Category: Foreclosure Short Sale

Comments (12)

Trackback URL | Comments RSS Feed

  1. Thanks for the advise, as a short sale investor we need every advantage & amunition against the banks to make our case.

    Thanks again

  2. Steve Mathers says:

    Good tip! Thanks much for sharing. I have 2 short sales in progress where the lender is counter-offering with a set number and not budging to negotiate? Any tips on getting the negotiator to come to a middle ground number? Evidently the BPO/Appraisal is driving the actual bottom line price they will take OR it may be a combination of what discount they can give and nothing more. I have shown official repair estimates from a contractor to validate a lower offer but ….no response.



  4. 9-10-09 Thursday I just got a call from an agent who I’m to trying work with, here in california, that her broker is telling her, that the full disclosure attachments I use (aff of understanding and S&P Addendum along with the grant deed to answer the seasoning issue) are all illegal and she has to withdrew all my offers, (10) This head stuck in the ground, broker. I have not gotten to the point of a approval offer, but documents stated above give me the right to market and list the property for me the buyer, plus most times finder the short sale through the listing agent that has listed and submits the offer along with they listing agreement from the seller. These Ass_ _ _ _ lenders are so Fruity stupid. The Law of Common Sense is broken daily, and actions of self in flicked damage (putting in or taking out of the deal to make it not work) should be agianst the Law of Common Sense. As an investor if the bank doesn’t want the listing agent’s commission, and as part of the complete short sale package the listing agreement must be in there, okay 25% discount on AGV plus X .55 cent on the dollar agreed to my offer price, 500,000 mortgage property buying at 206,000 and selling at 315,000 I know problem paying the listing agent commission and the listed the property also and the brought agent with their buyers, I walked away with over $70,000.00 profit No Problem

  5. admin says:

    Thanks for your comments!

    @Steve Jenkins Yes, it’s all about ammo… but as an “attitude” you’ll get farther working WITH the banks rather than AGAINST them.

    @Steve Mathers BPO is totally crucial, and has to emphasize active REO listings for comps, plus condition/repairs. Double check that they actually did an INTERIOR BPO, not just a drive-by!

    @Mikial Sounds like you’ve got the good and the bad… brokers can be a real pain, and you sometimes wonder what their real motivation is. Maybe you can get specifics as to what he thinks is “illegal”, or you could have your own attorney back you up, or you’ll move on to someone who gets it.

    Keep at it!

  6. Great post! We’ve run into the same thing. Of course we do about 10-15 short sales per month and get a lot of short sale referrals from other realtors. We’re able to use the same technique there, but now the lenders are trying to lower our commission to 5%.

    This makes things a little more difficult when we’re doing all the work/negotiation AND we have to pay a referral fee to the referring realtor. We typically have to refer to the Fannie Mae guidelines at Even if its not a fannie mae loan.

    But we have been able to get 7% commissions on some. I guess we all have to make money and service our clients the best way we can.


  7. walt says:

    I am currently selling a couple properties in FL. Lender’s main issue is appraisal…seems they are taking a market price on the high side. It is all about working with the lender and giving them data to work with. Many of the processors and negotiators are just average joes who have to process a certain number of packages a day. Help them justify the sales price…whether you are a buyer or seller. Of course now is a good time to be buying.

  8. admin says:


    How would you like to be able to stop your foreclosure(s) dead in the tracks, and own your rental property (or personal residence) free and clear within 3 to 6 months?

    How much would you care about the value loss of these FL properties if they were rented (for whatever you could rent them now) and you wouldn’t have to make a loan payment?

    I just recently learned about a program that I would not ever trust, recommend or even use myself, if it weren’t for one of my most savvy investor friends who teaches it, TJ Marrs.

    Check out his new “mortgage elimination method” at (this is not the same as his mortgage acceleration program). Look at his 2 free ebooks and video. This will set you free.

    Thomas (call me sometime!)

  9. admin says:


    Excellent tip – thank you for sharing the link that restores your higher commissions!


  10. Anne says:

    Great work, everyone! Steve, there is nothing more important than monitoring the BPO process in a short sale. Your next step should be to dispute the BPO. Some lenders will actually give you specific instructions for doing so. If they won’t tell you the BPO, ask them what comps were used, and thyen go find lower comps and send them to the negotiator. If the BPO is 3 months old or older, you can request that a new one be done–again, have some comps in your arsenal which support your point of view. Ask the lender what it needs to net.

    And, NEVER ever ever let a BPO agent into the house without you. Very often they don’t know what the purpose of the BPO is, and it’s your job to tell them and to give them some comps, and maybe even a copy of the hardship letter.

    Good Luck!

  11. Great response to an uneducated lender. Realtors do so much more than just “marketing”.

  12. ADD says:

    Finally someone standing with their real estate professional. Many people would just take the easy way out and then explain to the Realtor that it is the banks fault that your commission got cut or removed. Glad to know that there are people treating their Realtor fairly.

Leave a Reply

If you want a picture to show with your comment, go get a Gravatar.

CommentLuv badge