3 May I am a listing agent involved in a short sale transaction. May 3, 2017By Cindy Sellers Commission, Ethics 0 If the selling broker refuses to accept a reduced commission, the listing broker must decide whether to accept the lender’s request and have only the listing side of the commission reduced or decide not to accept the lender’s request. Once the offer is submitted to the seller, the listing broker no longer has the ability to unilaterally modify the commission. The cooperating broker could agree to accept the reduced commission but she/he is not obligated to do so. Also, there is no obligation on the part of a listing broker to reduce his or her commission in response to an offer from the bank or a demand from the bank to do so. Moreover, the MRIS rule with respect to compensation is that if there is any conflict with the unconditional offer of cooperation and compensation made in the compensation field(s), the information in the compensation field will control. The cooperating broker earns the offered commission upon procuring a buyer ready, willing and able to purchase the property on terms the seller finds acceptable. Additionally, Article 3, Standard of Practice 3-2 of the NAR Code of Ethics states that REALTORS® shall, with respect to offers of compensation to another REALTOR®, timely communicate any change in compensation for cooperative services to the other REALTOR® prior to the time that REALTOR® submits an offer to purchase/lease the property. It also says that after a REALTOR® has submitted an offer to purchase/lease property, the listing broker may not attempt to unilaterally modify the offered compensation with respect to that cooperative transaction. Standard of Practice 3-3 says that the listing broker and cooperating broker may agree to change the cooperative compensation. Our guidance under these circumstances is always for the brokers to attempt to negotiate a mutually acceptable arrangement. Absent that, we remind the REALTORS® involved that in order to act in the best interest of their clients, REALTORS® should not allow dispute over compensation to interfere with the settlement of the property. REALTORS® should allow settlement to proceed and then arbitrate any commission disputes at a later time. Regarding Fannie Mae loan servicers, they may not require real estate brokers to reduce their commissions as a condition to a short sale approval unless the commission exceeds 6%. According to Fannie Mae, the closing of a pre-foreclosure sale cannot be conditioned upon a reduction of the real estate commission to a level below what the listing agent and borrower negotiated. An exception applies if the total commission is more than 6 percent of the sales price. REALTORS® will have to ascertain whether the underlying loan in a short sale transaction is a Fannie Mae loan. They may ask the lender or loan servicer whether the loan is a Fannie Mae loan and consider submitting the Fannie Mae Announcement to the lender with the short sale package. For a copy of Fannie Mae's Announcement 09-03 (Servicing Guide, Part VII, section 504.02), go to https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0903.pdf. If an agent wants to find out if a mortgage loan is backed by Fannie Mae, the agent may call 1-800-7FANNIE (732-6643) from 8am to 8pm EST. For Freddie Mac info call 1-800-FREDDIE (373-3343). Related Posts I am in discussions with a prospective client on a listing for a property that will be a “short sale.” I am in discussions with a prospective client on a listing for a property that will be a “short sale.” Do I have to disclose this fact to prospective buyers? Are there any other issues of which I should be aware? Is it illegal and/or unethical for an agent to refuse to show another company’s listing to a buyer client based on the compensation being offered to the agent by the listing company? Is it illegal and/or unethical for an agent to refuse to show another company’s listing to a buyer client based on the compensation being offered to the agent by the listing company? . I represent a seller in a short sale transaction. I represent a seller in a short sale transaction. Where can I find guidance about the lender’s procedure for handling offers that come in after the property goes under contract? I am the broker for a small company and I still take listings. I am the broker for a small company and I still take listings. If another agent in my office has a buyer client interested in my listing, how can we make dual agency work? In a transaction involving the resale of a condominium, which MAR forms are used and under what circumstances? In a transaction involving the resale of a condominium, which MAR forms are used and under what circumstances? Can a licensee who previously acted as a subagent or seller’s agent switch hats and represent the buyer? Can a licensee who previously acted as a subagent or seller’s agent switch hats and represent the buyer? Comments are closed.