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FHA: OK for Brokers to Get Commissions on HUD REO Homes

HUD will update its system and allow brokers to be paid commissions on all competitive sales regardless of the individual or entity purchasing a HUD REO property.

WASHINGTON – The Federal Housing Administration (FHA) revisited its position regarding broker commissions involving U.S. Department of Housing and Urban Development real estate-owned homes (REOs).

The FHA’s original policy prevented brokers with an ownership interest from receiving a commission. However, the National Association of Realtors® (NAR) advocated to the FHA that the policy conflicted with its MLS rules regarding the payment of real estate commissions.

In response to NAR’s concerns, the FHA issued the following response:

“HUD has undertaken further research on the impacts of restricting broker commissions. As a result, HUD is currently working to update our system to allow brokers to be paid commissions on all competitive sales irrespective of the individual/entity purchasing the HUD REO property.”

The FHA says it will continue to keep a question about the selling broker/agent and their ownership interest, but it will be for gathering and analyzing information only. It will no longer require that the “Selling Broker Commission” field be filled with zero to proceed with the transaction.

FHA also said that HUD will remove the following warning notice:

“HUD will not pay a sales commission if the selling broker or agent submitting the bid is also a purchaser or has an ownership interest in an entity identified as a purchaser.”

The changes will take effect no later than Dec. 1, FHA says.

Source: FHA

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