Thursday, December 31, 2009

The New HUD-1: Where is the commission percentage?

(This is the final post in a series called "The 12 Days of RESPA Reform" which ran from December 20th through today. For a full list of RESPA topics, check here.)

Historically, the HUD-1 Settlement Statement showed the total percentage of commission in the 700 section of the HUD. This practice reflects a simpler time when the seller paid X% of the sales price to list and sell her home. Current practices in the real estate industry, however, have made the calculation of the commission (and representation of it as a percentage) a bit more complex. With the proliferation of buyer agency, broker flat fee commission charges, and a host of other business changes, representing commission as a simple single-digit percentage number is less effective.

The change:
The new HUD-1 eliminates the percentage used to compute the sales commission. The total amount of the commission to each real estate broker or agent will be shown on lines 701 and 701. The amount of the commissions disbursed at settlement will be shown inside the columns on line 703.

This concludes our "12 Days of RESPA" series. For a recap of all topics between December 20th and today, check here. As always, if you have any questions, please reach out to any of us or comment below. Thanks for reading!