Realtor Jobs and the Commission for Working with Short Sales
The business of foreclosure short sales, sometimes referred to as ‘pre-foreclosure’ sales is a complicated one to say the least. The processes involved are complex and time consuming, requiring those charged with initiating and assisting said procedures to hold vast knowledge and expertise regarding the subject. However, banks are increasingly putting realtors into a difficult situation where they must make a tough choice, which is to either cut their commission costs or be forced to walk away from the deal.
In the world of real estate, a short sale is a transaction in which a lender is compensated for a property which is nearing foreclosure with an amount less than is in fact owed. The bank agrees to a figure which falls short of the full amount, hence the term ‘short’ sale. Such sales are much more complicated and take a great deal more time than regular sales, meaning realtors often decide case by case whether or not to work with them. An increasing number of homeowners encountering difficulties due to health, employment or other factors are being forced to consider short sales as an alternative to foreclosure, therefore requiring experts to guide them through the process, including a trained realtor.
For the realtor, they accept the listing of a short sale property with the sole objective of helping the seller through the subsequent process to get their property sold. The realtor then has a great deal of responsibility to their client as the listing agreement is made entirely between these two parties. However, when a bank or other lender decides to inform a realtor that they will only consider paying them as little as 5% of the offer being presented to them, the realtor is forced into a difficult situation. He/she can basically stick it out and attempt to force higher commissions which would risk rejection of the offer by the bank. Or they can simply walk away from their initial intentions and agree to take the lower commission for the sake of helping out the client and ensuring the property sells.
Over recent years, the vast majority of short sales have allocated the buyer’s agent a commission rate of less than 3%. Homes that are approaching foreclosure and go for short sales instead do not get shown particularly often.
However, there are calls for legislation and subsequent changes of practice which will help create a level playing field for both parties and prevent this black and white ‘our way or no way’ attitude frequently adopted by the banks. Quite simply, under the rules, if a bank wasn’t happy with the numbers, they would be required to return to the buyer and ask for a higher fee for the home. The realtor therefore would not have to make the unpleasant decision as to whether they should walk away from the deal or accept a few that are way below their general worth.
Such would be of great benefit to agents across the business, though whether it is actually introduced and subsequently takes hold is another question altogether.
