The Lender Sent a Letter to My Client!

Often during negotiations the issue of commissions comes up. Far too many Realtors fold under the pressure. Why would you allow the bank to keep your money when you are working so hard? I've heard of agents standing up to the lender on commissions only to have the lender send a denial letter to their clients claiming it was denied due to the Realtor not reducing their commission.

We'll talk later about us all getting in a bus and driving to this loss mitigator's office but for now let's talk about this potential event. I suggest, as I did in another post, that if you hit a sticking point on commission that you get everything else in the offer approved. From here you can try a few different approaches.

The first option happens after the loss mitigator approves everything except your commission. At this point and prior to the approval lender being sent out you could ask for a supervisor and plead your case. I have had success with this approach on many occasions. Speaking with the supervisor/senior loss mitigator I'll explain that our team being involved increased the banks bottom line by much more than the 1 or 2% they are trying to capture from me. I detail our experience and the fact that if another Realtor had sold this they would have lost much more to their bottom line. You could add details that fit your situation and beliefs for your value to the transaction. But believe it or not this works very often.

The second option. I did this only once and it worked very well but has not been done enough to say it is a sure fire plan. First always set your seller's expectations that they should be trying to save some money in case it is needed to fully satisfy the lender's approval requirements. That would also encompass a shortage in commissions. But knowing the bank might try some dirty little approach like this let your seller know that if the bank does challenge the total commissions that either the seller can pay the difference or you can play hardball with the bank.

If your seller's know the game plan and options then great. If a loss mitigator suggests they will send a letter to your seller tell them you understand. Explain that you have educated your seller on the potential outcome and that in fact, you would like the loss mitigator to send you the letter first and you will even sign it to acknowledge the letter prior to it going to your seller. This completely caught her off guard and turned things around right away. Initially she stated some money is better than none. I responded as you might guess stating that was not in fact true. As a professional I understand at times it is important to cut my losses. I explained while I would hate to see my seller void the offer due to this issue if they do not have the money to pay me and you will not then unfortunately it may fail and go to foreclosure. We got off of the phone, she called back in two hours with a full approval.

Now talk with your broker about this last approach and if this causes any potential fiduciary issues on your end. By setting all of my seller's expectations and knowing what they were comfortable with (AND having them sign off on that) I felt very comfortable with this approach.

For another option read the article 'What Happened to My Commission Check?'

By the way, if they deny it and send a letter like this to your seller, I would suggest you escalate the short sale immediately. The fact remains that the bank wants the most money and if your offer is close to Fair Market Value and will truly net the bank more than a foreclosure a senior loss mitigator will see this and get the approval done.