Discussion on commission

[Maryann L.]

I just read through a bunch of posts for short sales and commissions. It looks as if everyone does it different. I'd like to hear from seasoned investors doing short sales how they compensate the Realtors. We have a commission structure that 1/2 of the Realtors we've talked to seem to think is great and 1/2 think they are loosing out.

Right now we pay a total of 6% on the highest sale (less lender paid commission). So for instance...
AB
We purchase for 150,000 and bank pays 4% = $6,000
BC
We resell for $180,000 and pay 6% = $10,800 (less lender paid commissions) = we owe $4800 (10,800-6000)

The agents we've been working with all along think it's great because they wouldn't have had a second sale without us, plus we're doing all the work. So if we hadn't come along they'd be getting the 4% on 150,000 or whatever they sold the property for IF they sold it.
(oh this is if they handle all transactions) They decide what to co-broke.

So we've been trying to branch out which means we've run into a few new Realtors. When we present our listing agreement disclosures, I've had 2 agents complain about the structure....so I'd like to see how everyone else is handling it so that I can tweak our commission structure if necessary.

[Scott Hubbard]

Some states are considered transactional meaning they can represent both the seller and buyer in a transaction. In others, the agent/broker must pick a side.
I have talked to attorneys in Arizona, California, and Colorado and all have said there is potential liabilities to the broker/agent.

You are in effect, hiring an agent/broker to use their expertise to create value by representing the same property at two different values. This is called collusion.

It is a much different situation if you use an agent to purchase the property in the A to B fix it up (add value), then use the same agent to sell B to C.

If your using an agent to do a straight retail flip, then your really adding no value. For us, as investors, we can do this because we disclose. However, for the agent/broker, it could cause problems with their DRE.

Personally, I get agents who bring me deals and I inform them what I have been told by my attorneys. I have paid both sides, but I get them to sign a waiver that they are responsible for their actions and the consequences.