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Old 05-21-2009, 08:08 PM
 
88 posts, read 261,201 times
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We were going to sell our house, which we are in underwater. We contacted the same realtor that we used to buy the house from. He said we would have to pay him comission (which I think was 6%), and I am pretty sure that went for even the short sale as well. Does that sound right? We told him we wouldn't be able to sell it then, because the value of our house is less than what we bought it for, and we have no equity hardly, and no money of our own to pay his comission and closing costs. What other options do I have besides refinancing the loan, or just handing the keys back? We have our mortgage with Flagstar, and we sent our evaluation information over to them, and when we call their 800# it says they have a 90 day backlog.
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Old 05-25-2009, 08:01 PM
 
2,838 posts, read 8,847,347 times
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Quote:
Originally Posted by towncentergal View Post
We were going to sell our house, which we are in underwater. We contacted the same realtor that we used to buy the house from. He said we would have to pay him comission (which I think was 6%), and I am pretty sure that went for even the short sale as well. Does that sound right? We told him we wouldn't be able to sell it then, because the value of our house is less than what we bought it for, and we have no equity hardly, and no money of our own to pay his comission and closing costs. What other options do I have besides refinancing the loan, or just handing the keys back? We have our mortgage with Flagstar, and we sent our evaluation information over to them, and when we call their 800# it says they have a 90 day backlog.
If your realtor wants you to pay his commission with a short sale, then find another realtor. The bank pays the realtor whatever commission it decides to, out of the proceeds of the short sale of your house. Aside from your own attorney fees, if applicable, you should have no out of pocket expense with a short sale.

Call your bank and request a hardship package, and find an real estate agent who is experienced with short sales.
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Old 05-25-2009, 10:18 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,114,306 times
Reputation: 908
Quote:
Originally Posted by towncentergal View Post
We were going to sell our house, which we are in underwater. We contacted the same realtor that we used to buy the house from. He said we would have to pay him comission (which I think was 6%), and I am pretty sure that went for even the short sale as well. Does that sound right? We told him we wouldn't be able to sell it then, because the value of our house is less than what we bought it for, and we have no equity hardly, and no money of our own to pay his comission and closing costs. What other options do I have besides refinancing the loan, or just handing the keys back? We have our mortgage with Flagstar, and we sent our evaluation information over to them, and when we call their 800# it says they have a 90 day backlog.

Most likely you will sell your house for less than you owe. IN that case it's a straight short sale, and you have to get permission for the mortgage comany to take less and settle the debt (not as bad as foreclosure.. goes down as paid in less than full). Unless you have the money to come to the closing with the difference, this is the best way.

As for a Realtor's commission, in a short sale the banks will cut the commission in half as part of the 'negoations" with the Realtor on the short sale. So, if you realtor gets a listing at 6% , in the end they will end up with 3-4%. If they start out at a lower percentage, then that will be cut in half.

You have to remember that a Realtor needs to get paid to do what they do. They dont make an hourly salary. They often will foot the bill or part of it, out of pocket in conjunction with thier broker completely out of pocket .. if the house doesn't sell, they are out the money. In addition, that commission of 6% gets split between his office and the cooperating broker (agent from another office).. so he ends up with 3%. That 3% then gets split between him and his broker so at the end of the day he/she will end up making 1.5% of the sale before taxes.

If he starts out with 4%.. bank will cut that down (most likely ) to 3%.. split between two brokers offices.. 1.5% each and then the agent will only get .75%.. less than 1%. At that, he / she may be lucky to even recoup out of pocket costs and time (in this market it could take well over 6 months to sell a house).

The only other way is to try and do it yourself, however you aren't going to get exposure AND you'll have to deal directly in negotions and handling of the short sale with your mortgage servicer (that could be very tricky and is best left up to a professional.. many pitfalls).

Good luck. I short sold my house back in October. My agent had a 6% commission that got negotiated to 5% (good for her.. because she was expecting it to get chopped to 3%). Short sales are extremely tricky and a mine field for agents and are some of the toughest deals to work from beginning to end. Mine went well and the stress that was relieved was amazing... even though we lost our shirts, we learned some valuable lessons and are no longer as stressed.
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Old 05-26-2009, 03:21 AM
 
Location: Pinal County, Arizona
25,107 posts, read 34,374,882 times
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One thing to make sure of when employing a RE Broker is, that they know how to price a price for a short sale and, that they don't get over their head with the commission split they offer to a cooperating broker.

Here in Arizona one of the COMMON problems is, the listing Broker takes a listing at say 6%, and offers the cooperating broker 3% (splitting the 6% 50-50).

When a offer comes in and it is submitted to the lender for approval, more often than not, the lender will not accept the 6% commission and will reduce it - how much varies but say, they reduce the commission to 3%.

The cooperating broker has no obligation to reduce the amount offered to them by the listing broker and can legally demand (and often do!) they be paid the 3% offered - resulting in the listing broker literally getting 0% commission - in other words, they worked for free.

If the listing broker is familiar with short sales (not all are), much of this potential problem can be eliminated.

Good luck
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Old 05-26-2009, 07:23 AM
 
1,788 posts, read 4,149,849 times
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Quote:
Originally Posted by towncentergal View Post
We were going to sell our house, which we are in underwater. We contacted the same realtor that we used to buy the house from. He said we would have to pay him comission (which I think was 6%), and I am pretty sure that went for even the short sale as well. Does that sound right? .
Yes that sounds right. Just because you're having financial difficulties doesn't make the realtor's bills any less. He still has to make a living.
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Old 05-26-2009, 06:44 PM
 
Location: Cold Frozen North
1,928 posts, read 4,523,864 times
Reputation: 1266
Quote:
Originally Posted by ZugZub View Post
Yes that sounds right. Just because you're having financial difficulties doesn't make the realtor's bills any less. He still has to make a living.
My friend who short-sold last year had the second mortgage company eat the real estate commission. His rate was 6%, but Chase demanded that he take 5%. He agreed and the deal was done.
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Old 05-27-2009, 08:21 AM
 
Location: Pennsylvania, USA
5,217 posts, read 4,114,306 times
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Quote:
Originally Posted by HighPlainsDrifter73 View Post
My friend who short-sold last year had the second mortgage company eat the real estate commission. His rate was 6%, but Chase demanded that he take 5%. He agreed and the deal was done.

That's right. The bank pays the commission. It's taken out of the sale price (along with other closing costs, including the seller's attorney fees).

The bank will pay the commission, because they'd much rather have a short sale than have an empty foreclosure on their books that would lose them even more money.

I'ts much cheaper for the bank to pay the commission.
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Old 05-27-2009, 11:11 AM
 
Location: Pinal County, Arizona
25,107 posts, read 34,374,882 times
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Quote:
Originally Posted by TristansMommy View Post
That's right. The bank pays the commission. It's taken out of the sale price (along with other closing costs, including the seller's attorney fees).

The bank will pay the commission, because they'd much rather have a short sale than have an empty foreclosure on their books that would lose them even more money.

I'ts much cheaper for the bank to pay the commission.
Actually TM, the Bank does not pay the commission.

The Commission agreement is between the Broker and the Seller. And, the commission is paid from the Sales Price being offered, to the seller, by the buyer.
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Old 05-27-2009, 12:53 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,114,306 times
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Quote:
Originally Posted by Greatday View Post
Actually TM, the Bank does not pay the commission.

The Commission agreement is between the Broker and the Seller. And, the commission is paid from the Sales Price being offered, to the seller, by the buyer.

If you want to get all technical.. then yes.. that is true.

But if the banks want to sell the house, and they do, they will take the commission out from any proceeds they recieve from the sale... even if the sale is short of what is owed.

SO.. while the contract is between the buyer and the seller the actual money gets taken out of the money the bank gets from the buyer...

Otherwise seller would have to go out of pocket for the commission.. and they won't and shouldn't have to.
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Old 05-27-2009, 09:00 PM
 
Location: Cold Frozen North
1,928 posts, read 4,523,864 times
Reputation: 1266
Quote:
Originally Posted by TristansMommy View Post
That's right. The bank pays the commission. It's taken out of the sale price (along with other closing costs, including the seller's attorney fees).

The bank will pay the commission, because they'd much rather have a short sale than have an empty foreclosure on their books that would lose them even more money.

I'ts much cheaper for the bank to pay the commission.
Yes, you're right about the seller's attorney's fees. The bank paid for them also to the tune of $2000. I was shocked when I found this out!

But like you said, the short sale is still better than a foreclosure for the bank.
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