Unless you signed a Buyer Agent Agreement accepting this additional commission you DO NOT have any obligation to pay this added commission. While I appreciate the Agent helping you to save $25k, that does not justify him trying to pull this stunt. Your Agent is only due the 2.5% commission that was posted in the MLS at the time your offer was written and submitted. Your Agent clearly knows this since he made it clear to you that you're not obligated to pay it. I agree with the Agents who commented earlier that you must speak with his Broker and let them know what has happenned.
Unless you had agreed upon an additional commission in advance, you owe nothing more. In fact, the buyer's agent commission is determined by the the seller and their agent from the beginning. You can find the rate on any MLS listings.
If there is any doubt you can go directly to your agent's broker. I agree with Matt C too that you should NOT sign any documents until you have this thing resolved.
Best of luck!
That said if when you close you wish to give your broker a gift for assisting you, that's up to you and perfectly fine if you feel as if they warranted it. Advising you to make a lower offer than you were originally considering is part of their job, their supposed to be acting in your best interest as a buyer broker.
If you don't have much cash on hand i also accept American Express, Discover, Mastercard and Visa.
That was a dirty move. He didn't even provide you with notice before slipping that on the HUD-1.
DO NOT feel guilty about any of his 3.5% hogwash.
Some greedy listing agents around here are offering 2 percent while retaining their 4 percent split on a short sale. If its a good property, i'm going to show it, get it under contract, and keep it moving.
Best advice: Don't spend a dime out of pocket. No matter how well he handled this transaction, thats HIS JOB. Hold off on paying him gratituities. Even one solid referral is worth a whole lot more than a 1/2 point in commission. He must owe money to a loan shark or the IRS. I don't see how he could in good faith, try to pull a fast eddie at the last minute.
If you like the guy, just send him a referral or two in the coming weeks and months. Or better yet: don't do that, instead, say your peace and bid him adue after closing.
This is a great post. I can imagine the feeling your surprise/ discomfort you felt when your agent asked you to pay additional commission a day before closing escrow.
This is not typical and additional commission is not required from the buyer.
I agree that this is not the best way to end relationship and kills the excitement of closing escrow.
I would not worry about paying or gifting the agent anything!!! If you look, you'll find many fine agents you could ask real estate questions. Frankly, I don't know if I would even trust someone again to ask if the sky was blue after a stunt like that.
I have done many short sales, (sell/buy) bank owned, regular sales, contingent-upon sale purchases, negotiating credits where appropriate. I simply get paid upon what was agreed upon up front all the time working to save my clients money throughout the transaction.
Yes it certainly is a tough business and a move like that as you can read by the number of responses is UNUSUAL at best.
All my best,
Building Trust for Life - Zephyr Real Estate
I agree with Lance. His explanation was very thin! Even thou he might have had to put in a alot more work on this transaction his return on that extra hard work would have come in the form of referrals and future business from you. I would imagine you would have sent as much business his way that you could. Think of all the additional referrals those referrals could have sent his way and so on. Now he has shot himself in the foot and hurt his business. What a shame!
First, thanks for all the advice. One thing I need to clarify is that the same day I saw the escrow statement, the agent did go over it line by line and then explain why he asked to add the commission. He said he worked a lot harder than usual, many months, nights, weekends, etc...
I actually went to escrow already and didn't pay the additional commission. Agent called after and said he was surprised and that it was the first time one of his clientes decided to not pay additional commission, that many times client add it voluntarily. I said I was planning to gift him in someway for all the great work advice, etc..But felt that adding that on the day before escrow was a bad move. We could have discussed it even a week ago and would be a different story. I would actually have paid it gladly. He insists he think it was not improper, and his intention was not to underhandedly throw that at me. Etc...
Just a bad way to end what had been a great agent/buyer relationship. But I don't want to be on his bad side as I might still need some help in the next days/weeks, or in the future I might need him to answer a question or provide a document.
If you were unaware of the added commission, and did not sign anything that agreed to it, I wouldn't pay it.
Whatever you do, don't sign the documents until this additional fee has been removed.
Send the agent a link to this page if he or she disagrees. Perhaps that agent would like to clarify what exactly it is they're thinking about. I'd sure like to hear it!
Barbagelata Real Estate
Our session at the escrow company started at around 8 am. We finally left at around 4:30 pm, but I got that fee taken out.
Moral of this story: do not sign closing documents that you do not agree with.
415 860 0765
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
Or, just simply say "no, we never agreed to that."
It is normal practice that the commission is negotiated and agreed upon and ratified as part of the listing brokers listing agreement between the seller and the broker representing the seller. It is widely understood that commissions are not fixed by law but are set by each broker individually and negotiated between brokers. This is usually performed in the onset of the contract signings and accepted as such at that time. So "normally" our commissions are set at 6% with a 50/50 split to cooperating brokerages or 3% for residential transactions. As professionals, we are relied upon to offer wise opinions and fact based responses to practical circumstances as part of our due diligence in serving our fiduciaries. Stay strong and good luck in your closing!