Posted by CarolFL on March 08, 2000 at 07:12:32:
I could smell the burnt flesh! Those of us with ‘big hearts’ also get to develop some thick skin.
Thanks for your post, Ed.
Subject to; RE Brokers and their commissions - Posted by CarolFL
Posted by CarolFL on March 07, 2000 at 18:14:50:
This presented itself today and I was unsure of the answer:
A property listed in MLS is about to go into foreclosure.
A buyer is willing to take it “subject to”, bring it current, but does not have the cash to additionally pay the 7% realtor’s commission.
His atty was unable to give any advice.
My broker buddy suggested he come into her office, write up a contract a purchase price of $10, subject to the existing mortgage and paying the arears.
So, what is the listing broker due? 7% of $10; 7% of $10 + arears; 7% of the whole enchilada including the balance of the mortgage?
My broker buddy thought that this would be grey enough to keep the listing broker quiet (i.e. why take it to the RE commission and open cans of worms?), could save the seller from foreclosure, and get the buyer into a house he can afford.
I must add that this broker is a really knowledgeable and neat person, who obviously has a huge heart.
I look forward to responses based on fact, and experience, not moral judgements.
Thanks, all.
Re: Subject to; RE Brokers and their commissions - Posted by Rick W.
Posted by Rick W. on March 08, 2000 at 05:02:27:
It would seem to me that the State Dept. of licensing or the local Board of Realtors would look pretty harshly upon the Realtor not allowing for a solution to the problem, although it is a creative solution.
If the commission is the only issue standing between the sale or non-sale of a property about to be lost to foreclosure, it seems awfully petty for the agent to stand in the way. But it has happened to me, too.
After my seller raised so much H*LL with the Broker, and filed a complaint with the local Board of Realtors, and threatened to file a complaint with the State, it finally got resolved. We did work out a commission structure that worked for all of us. It wasn’t what anyone of us WANTED, but is was workable.
It just takes open minds, and sometimes a little heat applied in the proper locations.
GOOD LUCK!!!
Rick W.
To all who responded - Posted by CarolFL
Posted by CarolFL on March 07, 2000 at 20:07:26:
Thanks, all. The point my buddy was trying to make was that the listing broker WOULD NOT negotiate in any way with the buyer - who happened to be talking with her about other things, frustrated over getting nowhere in trying to find a reasonable way to resolve a problem.
Of course, we weren’t there - it was not our deal - it was, however an interesting attempt to force a solution.
Thanks for everyone’s contribution, even Ed, who must have been burnt a time or two. Ed, the intent was to shake the fruit from the tree so that all could enjoy it - not to steal the fruit! A bonehead broker was standing in the way of any meaningful resolution, and way likely to end up assuring that her client end up in foreclosure by so doing. Is that so honorable and ethical?
Re: Subject to; RE Brokers and their commissions - Posted by Charles
Posted by Charles on March 07, 2000 at 19:52:15:
JPiper has the right idea - negotiate with the broker. The listing contracts we use have a minimum commission anyway regardless of sale price. It will also be a lot easier if you can deal with just one agent instead of the listing and selling agents.
Re: Subject to; RE Brokers and their commissions - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on March 07, 2000 at 19:50:11:
Hey Carol,
I’ll bet your (really knowledgable,neat super nice) broker buddy will not put one word of his reccomendations in writing. Your broker buddy is a con artist. He or she is giving advice on another brokers transaction (in my state that is sufficient grounds for license suspension or revocation). Now if you want to negotiate a fair deal on the commission you need to be talking to the listing broker, and you need to be realistic. You don’t really need to be talking about 7% of ten bucks. Most brokers will sit down and talk. If you and the seller (advised by your broker buddy) choose to try to defraud the listing broker, you can expect the listing broker to sue for a commission. Of course the broker will sue the seller who has no money anyway, but then what do you and your really knowledgable, neat, broker buddy care about that. You will have the house. Sounds really super neat to me. I sure hope you stay in FL, and I truly hope your broker buddy stays there too. I wish you both well…
ED (OHIO BROKER).
Re: Subject to; RE Brokers and their commissions - Posted by JPiper
Posted by JPiper on March 07, 2000 at 19:07:34:
Carol:
I think your broker buddy is way off base.
Let’s assume for a second that the deal was closed at a title company. When they prepared a settlement statement…the amount of the loan would be shown as a part of the sales price. Therefore, the sales price would be the total of the amount of the loan plus $10.
I’ve assumed many loans on a basis that I call “net equity assumption”…meaning I take the loan over, regardless of amount (of course I verify the loan) and give the seller a fixed dollar figure for his equity. When we find out the final balance of the loan, this together with the equity I’m paying totals the sales price on a settlement statement.
As far as the broker is concerned, I would probably plead the case of the seller…and ask them to carry their commission in a note. I’d let them know that you couldn’t do the deal otherwise, that the seller would face foreclosure, and they would have nothing. I think that will work for you.
JPiper
Re: Subject to; RE Brokers and their commissions - Posted by David Alexander
Posted by David Alexander on March 07, 2000 at 18:29:20:
What I have done in the past with RE Agents is have them drop their listing, I then consumate the deal and pay them a referral fee.
It seems like a Win/Win/Win for everybody. I get a house, the seller saves their credit and the Agent gets money on a deal that would have never happened before foreclosure.
David Alexander
Re: To all who responded - Posted by Bud Branstetter
Posted by Bud Branstetter on March 11, 2000 at 21:30:38:
Carol,
Don’t forget that a bankruptcy court can negate a sale if they think there was equity there that could have been used to satisfy other creditors. On our buyers affidavit that is used with purchases we have a statement that they are NOT considering bankruptcy. Probably not the case in this problem but it can be when you buy below market. People sell just to get some cash to live on.
Re: To all who responded - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on March 08, 2000 at 06:57:33:
Hello Carol,
If it was a win/win situation that was being sought here then I probably misunderstand the post. You say you were not there, so that makes things read a bit different.
As for being burnt lets say this, I still haave all my fingers and all my fingers have scars on them…
No Personal offense was intended…ED
Re: To all who responded - Posted by John Butler(Stl)
Posted by John Butler(Stl) on March 08, 2000 at 24:06:21:
Now that you elaborate, I would recommend going the good broker/bad broker route.(a CS technique that really works!) Tell the broker that the only way you can do the deal is if they take a note for their commission(assuming the deal works with the note factored in). If they balk(and you have not signed any buyer’s agreements with them), then tell them “I have a friend who is a broker who represents me from time to time, who will take a note. I would rather let you have the whole commission, but I need to have at least a partial note to make this deal work. Do I need to bring my friend in?” This hasn’t failed yet with me to get some sort of note negotiated. Of course this means you are paying 7% more for the property than you have to so you have to make sure it is still a deal.
Hope this helps,
John
Re: Subject to; RE Brokers and their commissions - Posted by David Alexander
Posted by David Alexander on March 07, 2000 at 20:28:54:
Ed,
You know that really that isnt needed. Carol is just trying to find a solution, and I for one know her heart is in the right place. Defraud anyone, No, put a deal together where everyone wins yes. Maybe it leads to a new relationship with an Investor that can buy more houses from the listing broker and make more money.
David Alexander
Re: Subject to; RE Brokers and their commissions - Posted by Bill
Posted by Bill on March 07, 2000 at 19:51:33:
I’ve heard this called net net offers but they sre great for letting a seller know exactly what he will walk away from the table with. make sure you get estoppel certificate from the mortgage holder first though,which is nothing more than a payoff figure from the bank.