If you represent yourself as a buyer in an Idaho short sale purchase, can you demand the bank pay you a commision?

This question was posted on a real estate forum recently and I wanted to expand on the short answer which is likely going to be, no.  First and foremost, the money you think you’re saving by doing this is not worth it.  These are complex transactions and having an experieced agent to help you navigate it is worth far more than you’re going to save.

If you’re not an agent, I would say it’s highly unlikely you’ll get the lender to give you the commission. This is probably an instance where representing yourself is not going to net you anything extra.

In a short sale situation, the lender is going to look at the HUD and in the section that details who the commission is going to, they are going to see only one brokerage listed. They will in all probability cut the listing agents fee significantly since both sides are being paid to one brokerage.

The lender does in fact take into account the commissions on a short sale. They take into account any fees that reduce the net below what they have determined to be acceptable. At that point they will start making cuts, and commissions are usually one of the first line items they go after.

Technically, the fees for a listing are an agreement between the listing agent and seller. The listing agent and seller agree in the listing contract what percentage or amount they are going to offer the selling agent. If you are representing the seller and are not a licensed agent, you are not a party to that contract and are not considered the selling agent.

Do you know how your are being represented in the purchase and sale agreement? If you let the listing agent fill out the purchase and sale agreement and used one of our association’s forms you are most likely being represented as either a limited dual agent without an assigned agent or the brokerage is acting as a non agent on your behalf.

In this case the listing agent is also the selling agent.

Bottom line is demands usually fall on deaf ears with lenders in short sale situations. They are going to do what policy mandates.

For Idaho homeowners at risk of losing there homes to foreclosure, a short sale can be a win-win for both owner and lender.  There are, however, some common pitfalls that can be detrimental to avoiding foreclosure in Idaho. 

Here are seven mistakes to avoid:

1. Waiting too long to do something.

2. Choosing to spend thousands of dollars to have an attorney file bankruptcy assuming it will make a foreclosure go away.

3. Choosing to sign away your Deed to your home to a third party and to give your home away

4. Choosing a lender Forbearance (payment plan) and not taking it. As long as you can—do it!

5. Choosing to “just walk away” and thinking “They can’t come after me after the foreclosure.”

6. Working with a person who is not experienced in the foreclosure process.

7. Not taking action now.

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It seems to have become a standard practice of Idaho short sale buyers to put in multiple offers on short sale properties and close on the one that gets approved the fastest. A proverbial throwing at the wall to see what sticks if you will. It sounds good in theory and knowing how long a short sale can take to complete, I can see why buyers of Idaho short sales resort to this.

The question becomes, is it legal to do so? The answer is yes, so long as you disclose it to the seller. Many buyer’s agents are running around with a short sale addendum that gives them a false sense that it allows them to do this without disclosing it and the fact is they could be setting you up to be liable in doing so.

Here’s why: In Idaho, if your agent is aware that you do not intend to perform on each short sale contract, according to the definition of adverse material fact, you are required to disclose it to the seller.

Adverse material fact, what’s that?

“Adverse material fact is a fact that would significantly affect the desirability or value of the property to a reasonable person or which establishes a reasonable belief that a party to the transaction is not able to or does not intend to complete that party’s obligation under a real estate contract.”

It’s a better idea to disclose it up front than risk legal recourse for something you might not have even been aware you were doing. The laws regarding Idaho short sales are changing almost as quickly as lending standards, it’s important to protect yourself.