Realtor buying house for self- price reduction instead of comission

I am a broker looking for a short sale or REO for myself.  I would like to give up my share of the commission for a discount in the purchase price in order to avoid paying income taxes on the commission I receive for buying my own house.

Can this be done?  Will this make my offer appear less favorable to the bank approving the short sale?
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February 18 2012 - Blossom Valley
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Profile picture for Caveat Emptor
you can state that you will receive 1 dollar and represent yourself in your addendum thus making it impossible for the broker to represent you, that is if you aren't worried about the 22cents in taxes you're gonna have to pay.

you might even phrase it as a "rebate" or refund of the fee. this way though you have to report it on your taxes and then deduct it as a loss. 0.02
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February 18 2012
Rita, 

I try to be positive, but that is an insulting question.  As  you can see, even among agents there isn't any consensus on this question.

I have a broker license, but I got it solely so that I can represent myself.  I plan on purchasing investment properties and want to be informed about every detail of the process.  
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February 21 2012
If you are a Broker should you not know the answer to this question?
Why would you be asking agents this question?
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February 21 2012
Thanks Roberto for the response.  Does the bank always work up a net sheet?  

I'm concerned that they wont even get that far with my offer if they see a higher offer that would possibly net them less due to commission expenses.
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February 21 2012
most posting on this thread have no idea what they are talking about! It's actually funny!

First off, most banks have strict rules that neither party to a short sale can personally profit as part of the deal. This means that, they will almost certainly write out the commission for an agent purchaser. 

Your choices are the following:
1. have another agent in your office represent you, and rebate the commission to your closing costs. This will likely go through, though you have to disclose this on the contract and on the HUD1, also, you have to disclose your status as a professional agent on your offer.

2. Call the listing agent. If they have experience on short sales, they already know your commission will be a problem, and then simply waive the commission on your offer. The bank will work up a net sheet, and take that into account. [and yes, commission are set between the owner and listing agent, BUT in a short sale, the bank will feel free to re-negotiate anything they want before they agree to the short sale]
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February 20 2012
Profile picture for the_country_hick
I have seen it said many times that a seller has a contract with the listing realtor. The commission agreement was already set up and agreed to.

How can the buyers realtor attempt to change the terms of the contract?

If the buyers realtor can change those terms shouldn't a buyer also be able to do the same thing?
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February 20 2012
I'm not sure that is the way I'd handle it on a short sale purchase. Because the bank tends to adjust the commission rate on a short sale, we usually are not aware of what that will be until they approve the sale and accept the purchase contract. In this case, I think I'd offer what I wanted to pay for the home and apply the commission to my closing costs. 
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February 20 2012
.
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February 18 2012
Thanks for all the advice.  I have a question about the mechanics of making an offer where I receive 0% commission now.

The way I was considering doing it was writing an Addendum to the C.A.R. Residential Purchase Agreement indicating that my offer was based on me receiving 0% commission for the transaction.

Given that the commission agreement is between the listing broker and the bank in an REO, I'm concerned that the listing broker can take advantage of the situation and collect the entire compensation as though he was working in a dual agency capacity.  

My main concern is making sure that it is not lost on the bank that I will receive no commission for the transaction and that the listing agent will only collect his/her half.

 
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February 18 2012
You won't know until you try. Keep in mind that the banks are motivated too! If you don't get the deal you want, be prepared to walk. You'll do well in these transactions by not being emotionally involved in any one home. They should work with you and that would make sense. Truly nothing the banks are doing right now makes any sense. I would deal with them the way they deal with us....uncommited. You might be pleasantly surprised!
Good Luck!!
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February 18 2012
Most short sale approval letters indicate a minimum "Net" amount the servicer / bank / Investor or MI Company have approved to release the lien, and don't mention the sales price. However, in the final analysis, you will only know when the final HUD is approved, just prior to closing. So keep your Pepto-Bismol close as even though I can't see a reason they wouldn't approve it, Services / Banks / Investors / MI just make up the rules as they as they go so you never know what's going to happen... Short Sales are almost always "Case by Case", or snow flakes as I often say... 
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February 18 2012
yes, just say "zero" in the space on the contract where you'd list your commission....and factor that into your offer.
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February 18 2012
I bought my last house by asking the sellers agent to reduce my commission to zero percent and then I reduced the offered price by the savings to the seller making the offer the same as if I sold it with full commission included. The sellers agent still had her commission, the part that would have gone to me is what I reduced the offer by. Yes, it makes sense.
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February 18 2012
 
Related Questions
Realtor buying house for self- price reduction instead of comission
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February 21 2012 | 13 answers
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