In the continuing struggle for anyone to accomplish a short sale (we hear that about 70 percent of short sales fail), we recently heard from several Northern California short sale agents that Bank of America began cutting commissions to 5 percent on most of their deals.
This new commission cutting seems against “guidelines” considering that we saw a top Bank of America VP speak to an auditorium full of real estate agents in San Francisco that Bank of America remains committed to a fair and equitable system of compensation for the work done by real estate agents in the short sale process. The B of A VP mentioned that the percentage amount may be based on investor and/or mortgage insurance guidelines, gross offer amount, and other factors.
With no specific investor guidance, Bank of America claims they typically pay a 6 percent commission with a $3,000 minimum on the majority of short sale transactions, scaling to a minimum of 5 percent on transactions exceeding $1 million.
Why should this commission cutting matter to anyone expect agents? Homeowners who need to short sale will find that the few short sale agents who know how to structure a short sale will find less incentive to battle the banks on their behalf if they see the banks automatically cutting the commission. If servicers such as B of A claim the cut is result of “investor guidelines” then either the servicers need do a better job of going to bat for the agents (not likely) or the agents will have to show their value directly to the investor.