Most agents are coming up short when it comes to short sales. That is until March 1, 2009. Like myself, agents who have grueled over a short sale transaction (Do not be fooled by the name…it’s a very long process!) knows there may be at a blink of an eye a drastic change in compensation when the lender announces a reduction in the commission will approve as a condition of accepting an offer. As you begin to feel your own blood pulsing in your veins from the manipulation, you realize a great deal of angst circulates around this issue. Despite what the seller agreed to pay in the listing agreement, the transaction cannot close without the lender’s approval which is often a “take it or leave it” attitude towards the agent. The seller and buyer want the transaction to close and I as an agent never want to be the cause of a fall through. Balanced against this is both mine and my broker’s need to earn a reasonable income and justify their own expenses and liability incurred in a transaction. If lenders condition acceptance of short sale terms on agents’ willingness to accept a reduced commission, agents really are left with zero options. 

Fannie Mae was made aware of this pattern and the adverse consequences of agents and brokers avoiding short sales. As a result, Fannie Mae announced a revised policy that took effect March 1,2009. Now, “closing of pre-foreclosures sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in aggregate.” This policy applies to Fannie Mae loans only and only to those loans where the borrower is in default. Nevertheless, it should give agents and brokers a degree of comfort in knowing that the agreed and earned commission will be paid on many short sale transactions. For a property secured by a Fannie Mae loan, where the seller is in default, the lender may no longer condition acceptance of buyer’s short sale offer on the agents’ and brokers’ agreement to reduce their commission below a total transaction commission of 6%. So short  buyers & sellers, breath. You no longer have to worry about a deal falling through due to reduced commissions paids. Agents, start listing and selling again! You will no longer be short changed from the short sales.

The new Fannie Mae policy says the following:

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 to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in aggregate. Servicers are reminded that they must continue to obtain any approvals that may be required by interested third parties in connection with preforeclosure sales.

To learn more about buying or selling a short sell, please contact my office at yournextmove@kw.com or 803.835.0213