Thats is a bunch of BS. Every short sale listing says in the confidential remarks section that commissions are subject to lender approval and any reduction is to be split 50/50 between the two agents. Are you using them as your buyers agent also?

His agreement is with the seller not you on the commissions. Quite simply, you are not a party to that portion of the transaction. This sounds like extortion to me and I ould suggest filing a complaint with the DRE.