Posts Tagged ‘commission’

When a question is asked of me more than once it is a good bet that it is a common one, so I’ll post briefly today on who pays the commission in short sale. The answer is simple: The lender pays the real estate commission.

In a regular sale, real estate commission is paid from the proceeds of the equity. In a short sale, sellers who cannot pay their mortgage and do not have the funds to cover a short fall cannot pay the commission, because there is no equity, no proceeds, and no outside resources. Therefore, as part of their loss, the mortgage company pays the real estate commission. They also wash away the past due payments, pay the back taxes, and anything else needed to pass the home to the new buyer with clear title.

No real estate broker should ever require a short sale client to deposit money in escrow, or take a fee in advance of an approved sale and closing. It is antithetical to the contingent nature of our business. The commission is an incentive to do your job, and I would be suspicious of anyone who asks for money up front.

Again, to be clear: In a short sale, the bank pays the commission. I have closed short sales in Yonkers to Suffern, Chappaqua to Poughkeepsie , and dozens of places in between. I have never taken a dime from sellers.  The bank has always paid the commission.

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