Can A Seller be Responsible for Short Sale Commissions? Of Course They Can!

A recent featured blog entitled "Can I Do a Short Sale Without A Real Estate Agent?" talks about an encounter a real estate agent had with a potential client in which the client was told by a friend that she will be responsible for real estate commissions. The author of the blog stated that this is not true. The author is wrong, and here's why:

The listing agreement is between principal and broker. If I have a x% listing agreement and the lender only pays a total of y%, I can get the difference from the seller.

Now you might ask yourself, "What type of monster will take money from a seller facing foreclosure?"

I have done this twice. It was because there was no financial hardship and the seller just wanted to offload some investment property that he was able to afford, but lost 50% of their value.

It is important to know that a seller is responsible for commissions because you can now be in a position to negotiate with the buyer to make up the difference! Each state has it's own laws pertaining to real estate commissions, but if you want me to expand on this on how I do it in California, I will do so.

Finally, the blog makes another misconception that the property needs to be listed before an owner can do a short sale. Again, this information is FALSE.

You can do a short sale without a listing agreement. If the foreclosing bank won't order the BPO (aka appraisal) unless it is listed, you can get around this by having the buyer pay for an appraisal and send it in. Also, if there is a BPO in their system because of an attempted loan modification, then a listing agreement is not needed if the net of the purchase offer meets the servicing and/or investor guidelines.

I do agree with the author that a seller should contact a knowledgable short sale agent and negotiate the commissions in such a manner in which the seller will not be responsible for any limitations imposed by the foreclosing lender.

If you are a seller and are worried about real estate commissions in a possible short sale situation, feel free to contact me and I will see how I can help.

If you are an Activerain member and think this topic should be discussed, please suggest this blog for a feature.