Commission Risks on Power of Sale


If I’m offered a Power of Sale listing that in my opinion will sell for less than the first and second mortgages combined, is there any way to ensure I will get paid (and more importantly be able to pay co-op broker)?


You will notice that somebody here is not getting paid. That means your commission is coming out of their share.

You’d better make sure that they are onside with your commission otherwise it will be challenged. Most of the time, it’s not challenged which, of course, is the reason it goes through smoothly in some cases. Who knows about this case!

The Bank holding the first might be agreeable to pay out of their share. This way, you would be guaranteed.

If your money is “coming from somewhere” in the deal, this just might not work.

Be careful, do the math, before you take it on.

It becomes quite risky with second non-institutional mortgagees.

Brian Madigan LL.B., Broker

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