Max Ryan, Real Estate Pro in Pennsylvania

I am a new agent in Pa, this may sond like a stupid question but, the seller actuall pays the comission from

Asked by Max Ryan, Pennsylvania Sat Mar 29, 2008

Dose the seller pay the commision to both agents from the money they recieve from the sale. Or will the commision be deducted from the check before it goes to the seller?

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11
Max,
You have received good answers from the other agents, but one thing that may help you is to try to spend a couple of days with your closing department people (if you have one in-house).

I worked behind the scenes for many years, in closing, mortgage processing, title work well before I stepped forward into being a front-line Realtor. This experience was invaluable, in that I know what needs to be done on the 1st day of a transaction and how it can impact the last day at closing....

I mentor new agents, and always encourage them to get some knowledge of the closing and title process. They don't teach that in Real Estate licensing classes.
Good luck in your new career!
Web Reference: http://www.GoPackerUp.com
1 vote Thank Flag Link Sat Mar 29, 2008
In GA, when we take a listing, we discuss with the owner the commission. Usually it is a percentage of the sales price, and not, in addition to the sales price. I always explain, that whatever the percentage is, I may have to share it with another agent who brings a qualified buyer. This is called "Co-op". We share the money with other agents and REALTORS. Most of the time the buyer is not my client. When I list the property on the MLS, it clearly shows the selling agent's commission. When listing, it's a good idea to do a CMA on the property to determine that the listing is not overpriced. You can do a "net to seller" sheet if you want to get into the financial aspect of the listing. Sometimes sellers need to bring money to the closing. Don't be afraid to advise them of this fact.
If you are the buyers agent, you probably want to get a buyer brokerage agreement. Just advise the client that your commission will be paid by the seller, unless they chose to by unlisted property where the seller refuses to pay your commission (very rare). I recommend always using the MLS for showings, because the sellers have already negotiated paying the selling agent's commission.

Best of luck on your new career. Keep asking questions. You do your clients, yourself,and our industry a great service by giving correct information.
1 vote Thank Flag Link Sat Mar 29, 2008
yes in most states that is normal however commission are completley negotiable and can be arranged in any way. Our company asks the seller to pay but nothing is set... it is all negotiable. Darlene
1 vote Thank Flag Link Sat Mar 29, 2008
The title company will deduct the commission from the seller's proceeds at closing. The money will be disbursed at the closing table in the form of a check written payable to your Brokerage such as Remax or ABC Realty. Your agreement with your Broker will determine how much money you will actually get from the commission amount. If the total commission was 6% and 3% of that was the cooperating agent's portion then the other 3% is what your company has to work with. You will likely not get the full 3%. Like I said, the true amout you will get is determined by the type of commission split you have with the company you are associated with.

This is a good question to discuss in an open forum like this. Most folks do not understand the way Realtors get paid and they are even more unaware of the numerous subtractions that will reduce your net income. Few Realtors if any actually walk away with the full commission that they negotiated on their Listing Agreement. It is usually split with the cooperating agent as payment for bringing in a qualified buyer and seeing that their end of the transaction runs smoothly. A Realtor may have many deductions taken from their commission. The true dollar amount for many Realtors will be significantly diminished once these deductions have been taken.
1 vote Thank Flag Link Sat Mar 29, 2008
First thing you should always know who is paying you-in any business.You should also be aware that Pa has some policies regarding real estate that are very different from its neighboring states. For example you take "binders" where NY does not. If your brokerage does not have a formal training program - ask your manager if she could hook you up with a "mentor". This person can teach you a lot of the "practical knowledge" you will need(not all the legal terms & facts you learned in your licensing class). This mentor can take you on her listing appts or go with you if you have a listing appt or let you ride along when she takes out a buyer. You can agree to a fee in return(ie:25% of your 1st two closings etc). Coldwell Banker had a program like this years ago before there was a training program & many people found it useful.
good luck, Lisa
0 votes Thank Flag Link Mon Mar 31, 2008
Hi Max:

Since you are a new Agent in PA, I think who pays commission is a very basic, fundamental, required to know agent knowledge that you should has your Broker to explain. You do need to have a Broker so you can get paid either way - the commission is paid to the broker not individual agent.

See the answers from below and go back and ask your Broker to explain that to you. Hopefully you have found a brokerage which emphasizes on training and helping new agent through their transactions and the whole firm has a spirit of supportive and team work.. That's what I looked for when I first got started.

Sylvia
0 votes Thank Flag Link Sun Mar 30, 2008
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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Max

No such thing as a stupid question.

On page 2 of the HUD-1, right at the top is the breakdown of the commission.

This is usually considered a debit to the seller.

Since you are a new agent I would suggest you have a mentor in your agency (A high producer but not necessarily the highest) and tag along to a couple of closings.

My first deal I got lucky my mentor was the the other agent and I learned a lot plus after the closing we had lunch and he explained all about the HUD.

Also while we are on the subject try to tag along as an "associate" on listing presentations and also get a cheat sheet for sales contracts. Since they seem to be changing the contract every few months at my board I still get to use a cheat sheet that's updated with the changes.

Good Luck and Welcome to Real Estate

JD “Dan” Weisenburger, GRI
Broker-Associate REALTOR®
Vanguard Realty, Inc. GMAC Real Estate
Web Reference: http://www.neflahomes.com
0 votes Thank Flag Link Sat Mar 29, 2008
Max,
The monies paid in brokerage fee is set in the contract between the seller and the lisitng brokerage. That money is shown on the closing statement (HUD 1). The closing statement shows the balance of all monies exchanged in escrow. It shows the sellers loan pay off and the buyers new loan, all fees and cash and the brokerage fees.
Remmeber that the seller sgrees to pay the brokerage fee and does that with money brought to the table by the buyer.
Also remember that it is usallly an agreement between brokerage companies that allows for a commission to be paid to the selling (buyers side) agent. If you don't belong to a brokerage that participates in an MLS or has copoerative agreements you need to be sure to get an agreement form the listing agent in writing prior to ratification of the contract.
0 votes Thank Flag Link Sat Mar 29, 2008
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
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The typical transaction closing is handled by a closer or escrow agent (or equivalent) - someone licensed by the state to provide that service. Their job, among other things, is to ensure that all debits and credits to/from both buyers and sellers are accurate and complete, including any commissions that are due on the sale, whether paid by buyer, seller, or someone else. So the agents/brokers would be paid out of the closing account at the same time as the seller receives their proceeds from the sale. The contracts involved in the transaction specify who actually pays the commissions, but it is typically the seller who pays both sides - that is the way most listing contracts are written. Good luck with your business!
0 votes Thank Flag Link Sat Mar 29, 2008
It's confusing to know who is really paying the commission here. The seller does not pay the commission from their proceeds. The money is actually deducted from the gross amount on the HUD closing statement before it hits the hands of the seller. Obviously, the proceeds are coming from the buyer's funds. However, seller's usually agree to pay a commission based on those gross proceeds.
If the buyer has entered into an exclusive buyer agreement with an agent the buyer may actually end up owing money to pay commissions at closing if they have agreed to pay more than the seller is willing to compensate. E.g. the seller is offering 2.5% and the exclusive buyer agreement with the buyer agent is at 3%. Most of the time buyer agents will take whatever the seller is offering.
Once I was at a difficult closing with my buyer where we were still negotating some walk-thru issues with the seller and the attorneys. The seller turned to me and said "Don't forget who is paying your commission!" Since I did not have a buyer agency agreement with that particular buyer, it made me ponder who are we representing. Since agency representation is a big issue, we need more clear cut rules. In the travel industry, travel agents represent the carriers, since they are the ones paying the commissions. I got a big fat refund on an overcharged airline ticket once because it was deemed that the agent did not have my best interest in mind because the carrier paid her the commission. Food for thought!!!
0 votes Thank Flag Link Sat Mar 29, 2008
Commissions are paid from the seller's side. Thus, if there is a 7% listing commission, it is split in half.
That's if is not otherwise noted.
0 votes Thank Flag Link Sat Mar 29, 2008
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