Question Details

Yvette Marie, Real Estate Pro in Rockville, MD

Change in commission after ratified contract??

Asked by Yvette Marie, Rockville, MD Mon Dec 16, 2013

In 10 years of real estate never had this happen - After contract fully ratified by my Buyer - Listing Agent says after speaking with the Seller they are going to lower the commission!? Besides losing my cool - how should I handle this?? Any advise is appreciated!

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Answers

14
Best bet is too let your Broker handle it...so sorry to hear this happened to you and during the holidays no less.
1 vote Thank Flag Link Tue Dec 17, 2013
Yvette,
This would violate the rules in my MLS, they may in yours too. Your broker should be your first stop for an answer. It's false advertising to post a listing with X% commission and reduce that at any point. The listing agent may do whatever they choose to do, but the buyer's agent should be exempt from this "re-negotiation" by what sounds like and uniformed (at best) or unethical seller and their agent who should also know better.
1 vote Thank Flag Link Mon Dec 16, 2013
@John, let me clarify. An agent can do with their commission as they see fit, i.e., voluntarily reduce or forego it. However, an agent and/or party cannot unilaterally change another agent's commission without his/her consent. The issue of the buyer's agent's commissions should never have been part of the mix without her offering it.
1 vote Thank Flag Link Mon Dec 16, 2013
Like Barbara NC law says the commission is not to even be mentioned in a contract to purchase and we go by what the MLS commission is listed at. It is well understood that short sales can be a problem and that the bank can change the listed commission if they want to, and often do. If it was not a short sale then I would contact the Board of Realtors there and file a grievance with them.
1 vote Thank Flag Link Mon Dec 16, 2013
Thanks Tim - I understand about short sale commissions, however, this was a standard sale.
Flag Mon Dec 16, 2013
Hi Yvette,

This happened to me once many years ago. In California, commissions are never to be part of any negotiations. The seller must honor the commission as stated on the MLS when you showed the property. If they refuse to do so, have your broker contact the listing agent's broker immediately.

Good luck to you,

Barbara Grandolfo
1 vote Thank Flag Link Mon Dec 16, 2013
Thanks Barbara - My Buyer loves the house and I don't want to jeopardize her purchase in any way, however, I feel this is extremely unethical. I will
try to work with the listing broker but this has now led to mistrust.
Flag Mon Dec 16, 2013
In FL, it's what commission is stated on the MLS before (!) you show the property. If you want to negotiate the commission BEFORE you show, this is alright per FL law, to the best of my knowledge.

Surely there must be something concrete in MD for commission standards.

GOOD LUCK.

Scott Miller
Realty Associates
Boca Raton, FL
0 votes Thank Flag Link Tue Dec 17, 2013
Yvette,

Don't loose your cool, but I have noticed that beside helping the buyer or seller in this transaction the next most important thing and the whole reason for you to be in real estate is the commission. Akil Walker made a very good point, it is imperative that you send out commission bill right away so that no body has the opportunity to change his or her mind after contracts and bills are singed. I would also try to find out why the seller lowered the commission, sometimes it might not have to do with the seller wanting more money but maybe the seller is almost upside down and forced to pay out of pocket to walk away. Find out the facts first then go from there.


All the best,
Antonio Sanchez
Exit Realty Search
3928 E. Tremont ave
Bronx, NY 10465
CELL: 347-320-0673
BUS: 347-202-4965
antonio@exitrealtysearch.com
http://WWW.LOVINGMYTOWN.COM
0 votes Thank Flag Link Tue Dec 17, 2013
Hi Yvette,


I am sorry to hear this. so much for holiday cheer! Don't lose your cool. Talk to the agent to see how the seller made that determination after a contract was ratified. Did you have an opportunity to sign a brokerage commission agreement? this is binding, unless there are some unique circumstances.

I hope it all works out.
0 votes Thank Flag Link Mon Dec 16, 2013
Hello Yvette,

I have never had this happen. I am so sorry you have to deal with this.


The listing agent can reduce his commission if they wish to, but they should pay the buyers agent the commission as listed in the MLS UNLESS the buyer's agent agrees to take a commission less than the published commission. IF the listing agent took the listing at 5% and listed the selling agent's commission to be 2.5%, then after a fully executed purchase agreement is in force decides to accept 4% from the seller. He/she still has to pay the buyer's agent 2.5%.

Do not loose your cool.

Have your broker speak with the listing agent's broker. Hopefully a meeting of the minds can resolve this fairly.

I wish you the very best in this situation.

Kawain Payne, Realtor
0 votes Thank Flag Link Mon Dec 16, 2013
You should have your broker handle it, Yvette.
0 votes Thank Flag Link Mon Dec 16, 2013
Great advise from all.
1. Keep your cool. The listing agent knows this is a mess. Your mission, both of you, is to find the solutions.
2. Understand the problem. (it is rarely what it appears to be)
3. Ask more questions.
4. Identify the solutions. (Pay me in gold frankincense and myrrh)
5. Present the parties (your broker, seller broker, seller agent, seller) with the outcome. ..... you WILL be compensated.
*The first one to speak loses.
Your brokers attorney on retainer will take care of the rest.
DON"T use the Board of Realtors unless you have assurance of timely resolution. Choosing this option could create a constriction on plan B (the attorney route.)
0 votes Thank Flag Link Mon Dec 16, 2013
Great advise from all.
1. Keep your cool. The listing agent knows this is a mess. Your mission, both of you, is to find the solutions.
2. Understand the problem. (it is rarely what it appears to be)
3. Ask more questions.
4. Identify the solutions. (Pay me in gold frankincense and myrrh)
5. Present the parties (your broker, seller broker, seller agent, seller) with the outcome. ..... you WILL be compensated.
*The first one to speak loses.
Your brokers attorney on retainer will take care of the rest.
DON"T use the Board of Realtors unless you have assurance of timely resolution. Choosing this option could create a constriction on plan B (the attorney route.)
0 votes Thank Flag Link Mon Dec 16, 2013
Barbara - I completely agree with you. What I was hoping to point out is that without a specific acknowledgement of the buyer's broker commission, there is too much opportunity for the seller to either directly break the specified promise in the listing or to try to put the commission in play - the famous "oh golly, we're so close to a deal, if you greedy agents would just reduce your huge commissions a little we could make this deal happen." That's why we include the buyer's broker commission in the offer - to make sure that everyone clearly understands all the financial responsibilities of the deal.
We are, however, frequently in a position to accept things other than cash for our commission, such as deeds of trust, notes, personal property or other non-cash compensation. That's outside-the-box for most brokerages, but being a small shop doing many mixed-asset and special circumstance transactions, we have the ability to make those things happen.
0 votes Thank Flag Link Mon Dec 16, 2013
I agree with how Barbara suggests you handle your situation - speak with the seller's broker first before going to your local REALTOR board (which only works if the other agent is a REALTOR - a growing number of agents are not) or contacting your broker's attorney.
But I disagree that "commissions are never to be part of any negotiation." They are part of 100% of our negotiations, whether representing a buyer or seller. A commission is a tool that can be used many different ways for a client's benefit.
We include the commission offered in the MLS in our purchase offers to make it a part of the purchase contract. This provides the buyer with options, such as paying our commission directly if they want to use the commission as a negotiating chip to gain a seller concession with a higher value.
Also... never lose your cool no matter what the situation. It's very unprofessional and takes the focus off the real problem.
0 votes Thank Flag Link Mon Dec 16, 2013
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