Seller paying buyers' agent commission, how does Fannie Mae want to handle this?

[Wayne Henry]

Hello colleagues.
Was there any guidance from Fannie Mae on how to treat the amount the seller pays to the buyer's agent in a purchase transaction? At first glance, I assumed it would be considered financial assistance based on the definition in the contract section on the 1004/1073 forms. However, after asking Adobe AI, which reviewed the contract of sale, it stated the following:

The 2.50% the seller is contributing to the buyer's agent is not considered a seller concession. This amount is the broker's fee or commission paid to the buyer's agent for their services in the transaction. A seller concession, on the other hand, refers to funds or credits provided by the seller to the buyer to help cover closing costs, prepaid expenses, or other settlement costs. These are separate from agent commissions and are typically negotiated as part of the contract.

Since this change in the Real Estate industry is fairly new, I am seeking guidance or opinions on how to handle this amount. Should I put "No financial assistance" with a comment explaining the seller's contribution, or should I consider it a seller concession? I am interested to hear feedback from other appraisers on how they are handling this issue. This is my first purchase appraisal assignment with this scenario since the change was made.

 

[glenn walker]

They don't. Plus you don't adjust the Subject Property anyways.

Personally I would check no and explain and be done, because now buyers or sellers can pay sales commissions and untangling it gets messy. It's a Rabbit Trail down review and stips from a slow or bored Underwriter or reviewer. Lol

 

[J Grant]

Who pays what part of a RE commission has nothing to do with us, unless for some reason it impacted the Sale price which in most cases it doesn't - Fannie and Freddie ruled for RE agents -
The GSE position is that RE commissions are APART from concessions, a seller or buyer paying a commission is not considered a concession- lenders have caps on concessions, therefore, they want to make it clear that RE commissions are not part of it.

Imo, an appraiser does not need to comment on which RE agent pays which part of a commission in the contract analysis.

 

[Jerry Bone Jr]

Hello colleagues.
Was there any guidance from Fannie Mae on how to treat the amount the seller pays to the buyer's agent in a purchase transaction? At first glance, I assumed it would be considered financial assistance based on the definition in the contract section on the 1004/1073 forms. However, after asking Adobe AI, which reviewed the contract of sale, it stated the following:

The 2.50% the seller is contributing to the buyer's agent is not considered a seller concession. This amount is the broker's fee or commission paid to the buyer's agent for their services in the transaction. A seller concession, on the other hand, refers to funds or credits provided by the seller to the buyer to help cover closing costs, prepaid expenses, or other settlement costs. These are separate from agent commissions and are typically negotiated as part of the contract.

Since this change in the Real Estate industry is fairly new, I am seeking guidance or opinions on how to handle this amount. Should I put "No financial assistance" with a comment explaining the seller's contribution, or should I consider it a seller concession? I am interested to hear feedback from other appraisers on how they are handling this issue. This is my first purchase appraisal assignment with this scenario since the change was made.

If I were to use this sale as a comparable, I would list $15k in concessions. I would disregard the 2% as it is a seller cost associated with nearly all sales, therefore not special or creative financing.

 

[J Grant]

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If I were to use this sale as a comparable, I would list $15k in concessions. I would disregard the 2% as it is a seller cost associated with nearly all sales, therefore not special or creative financing.
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Why are you reporting a seller (? ) paying buyers the agent commission, when RE commissions are EXCLUDED from concessions per the GSE statement ?

The terms buyer's agent and seller's agent are a joke - regardless, a listing agent listed the property and another agent bought the buyer over, and who pays what part of the commissions, if one wants to comment on it should be done outside the concession line.