It’s about time that somebody figured out that real estate agents have been fighting an uphill battle when it comes to short sales. After months of nightmare scenarios coming to life, Fannie Mae has finally done something about the problem.
With new rules in place effective as of March 1, real estate agents will have an easier time getting short sales closed—and getting paid for their efforts.
Any real estate agent who has ever been involved in a short sale transaction knows too well what I’m talking about. The situation has played itself over and over again—too many times.
Here’s what happens:
The agent works overtime to put together a fast transaction to get a property sold. Everything progresses swimmingly.
Then, right before closing, the lender calls and says, “Everything is all set. We agree on all terms—oh, except for the real estate commission. You’re going to have to lower that.”
Nothing infuriates me more when I hear this—and I hear it way too often from too many agents. It’s reaching epidemic proportion.
After all your hard work—performed at triple speed to satisfy the demands of a short sale—suddenly you’re held over a barrel by an unscrupulous lender. The demand to cut your commission lands on you like a load of bricks, burying you in its insensitivity to your efforts.
Short sales have enough emotion surrounding them. Now, the lender takes this snake-like final step, sending you through the roof with anger.
In short sales, the real estate agent is the hero who swoops in to make the transaction a reality. Then, somebody has the nerve to say in effect, “Thanks for everything. You’ve done a great job. But we’re not going to pay you.”
Talk about a slap in the face! It makes me so angry just writing the words.
It’s not just the audacity of expecting work for very little or nothing. It’s the fact that by taking this low road, the lender puts the real estate agent in a horrific position.
If the agent doesn’t agree to take a reduced commission, he or she looks like the bad guy. The lender goes to the client—your client—and says, “We just couldn’t put the deal together because your real estate agent is so inflexible.”
No agent in his or her right mind wants to see their client get treated this way, especially considering all the emotion already present with a short sale.
But now—thank heaven!—somebody has recognized this problem and is taking the first step to doing something about it. It’s not the biggest step in the world, but it’s one heading in the right direction.
According to the exact words from Fannie Mae (Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers):
Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in aggregate. Servicers are reminded that they must continue to obtain any approvals that may be required by interested third parties in connection with preforeclosure sales.
Great news. Fantastic news. I almost leapt for joy when I read it.
Because somebody out there “gets it”. Somebody out there knows that real estate agents have been getting the short straw on this for a long time.
Yes, the rule is tiny in comparison to the wide-ranging short sale nightmares now commonplace in the industry.
But this is a good start.
Yes, I’d like to see this apply to more than just Fannie Mae and not just to loans in default (which is the case with this new rule). But at least somebody—somewhere—heard our complaints.