The thing about being a Sacramento short sale agent is the surprises just keep coming. No matter that I've been in the business for more than 35 years, I still haven't heard it all. Even though I've been selling short sales pretty much exclusively going on 7 years. See, one of the reasons I write this blog is because there is an abundance of new stuff every single day to blog about. There's always something horrible happening. It's the way of the short sale, grasshopper.
For starters, all of my listings contain verbiage in MLS that discloses to buyer's agents the commission offered might be reduced by the bank. Nobody wants to work for peanuts. I get that. I don't want to work for peanuts, either. But the fact is regardless of how much compensation the seller and I agree on in the listing agreement, that commission still must be approved and authorized by the short sale bank.
Years ago, I used to ask for more than I thought the bank would approve. Because sometimes I would get it. But MetroList put a stop to that practice. MetroList said I could no longer ask my sellers to agree to pay a certain percentage unless I was assured that the bank would authorize it. I can't assure anybody of anything in a short sale, so MetroList knocked out that practice for me. I realize MetroList was trying to stop the crazy agents who were luring the innocent and unsuspecting through doubling or tripling commissions, but its ruling affected my listings instead. So, now I just say we will split the reduction if the lender reduces the commission, and everybody gets the short end of the stick if that happens. Fortunately, it doesn't happen very often.
But enough about money. In my world, the clients come first. The clients always come first. Even if I don't particularly like it, they come first. I have a fiduciary, and I take fiduciary relationships very seriously.
Imagine my shock yesterday when an agent threatened to tell his buyer to cancel the transaction if he had to cut his commission. I can't for the life of me imagine how that conversation would go down. Would he say, "Hey, we have short sale approval but my commission has been reduced so I want you to cancel the short sale?" Or, would he lie and say the short sale has not been approved? Once an agent writes an offer, an agent agrees to the possibility the compensation might be reduced, as stated in MLS.
I believe if an agent can't make an exception for a buyer and give a little now and then, that agent should not be showing short sales. Because nothing in short sales is cast in concrete. But that's just me. Some days you are the rabbit and some days you are the fox.
It seems that Wells Fargo has a newer practice in place regarding commissions. It applies to double Wells Fargo short sales, those with a first and a second Wells Fargo loan, and that second loan is negotiated in Iowa. Instead of cutting the commission on the front end and agreeing to pay more than $3,000 (or 6% of the second lender's unpaid balance), Wells Fargo has devised a plan to do it in reverse. It has something to do with their investor guidelines, I suspect, because I asked and the negotiator did not deny it.
What Wells Fargo has elected to do is pay full commissions on the front end and then take away part of it on the back end. The first will most likely agree to pay the amount stated in the listing agreement, whatever that is. But the second will then demand agent contributions to the second. Oh, they will cheerfully chirp that the buyer can pay it, but the buyers don't have any money. And because of SB 458, the seller can't pay it, either. So, buyers agents need to know that if they write an offer on a double Wells Fargo short sale, yeah, the bank will probably snatch part of their money.
But it's really not any different than snatching it on the front end. It's all the same money. Of course, a buyer's agent always have the right to say: No, I will not show that short sale to you, Mr. and Mrs Buyer. Because if we go into escrow, I won't make as much money as if you bought, say, a Fannie Mae short sale. I believe that Sacramento real estate agents are a lot more ethical than that. Don't you agree?
Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.
Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.