Home Buying in 11561>Question Details

Fsbo, Home Buyer in 28202

If I bought a house without a buyer agent would the listing agent be legally able to refund the 3% buyer's agent commission to me?

Asked by Fsbo, 28202 Fri Jul 13, 2012

I KNOW this question is going to seriously piss off all the real estate brokers out there.

But it is about a $18,000 question for me. I am buying a $600,000 house. In today's internet age, I don't need a buyer agent to find a house for me because all the information is all out there. My wife has plenty of time to go look at 30 houses to find the perfect one. She can meet the listing broker of all 30.

I realize buyers agents do more than just find me a house. I DO understand what they do, but honestly I would rather have the 3% myself and do the "work" of negotiating the best price myself than hire a buyers broker to do that for me. I also realize that the seller "pays" the buying agent, but if the seller is willing to discount the price of the house by 3% because they don't have to "pay" the selling broker or the listing broker pays me the 3% (because they are not doing more work and should not get the full 6% in my opinion.)

So is it legal? Thoughts?


Help the community by answering this question:


Truthfully, Cindy - his thinkiing isn't really " wrong", as you just stated you willingly reduce your commission 1 or 2 % when you're in a dual agency situation........that's exactly what Fsbo is looking for - a commission reduction if the agent is handling both sides of the transaction.
Sure, he is asking for a bigger cut, but......you apparently "typically" agree to reduce what you're getting, just not to the extent Fsbo is hoping for....................that's not a critique - just an observation.

This just points out something that often rears its little head online....the question about commissions ........and, as many of us like to remind others.... "all commissions are negotiable", which is true - as has been noted here.............we all have our own way of conducting business.
2 votes Thank Flag Link Sat Jul 14, 2012
Not true if you already have an existing listing agreement in effect. You're under contract and that would have to be renegotiated by the broker and amended to reduce the commission before a contract is written. Some states allow. Some don't.
Flag Tue Jan 6, 2015
If you are concerned about $18,000, or whatever amount, maybe you should consider a less costlier property. Keep in mind that the seller already negotiated the commission contract with her agent, therefore the agent is entitled to the full amount.
2 votes Thank Flag Link Fri Jul 13, 2012
Absolutely, you can do that.

You can actually even get a lawyer to write a contract for a flat fee.

IRS rules, allow it.

1 vote Thank Flag Link Fri Apr 19, 2013
put the bid in through redfin and you will get money back. Even if listing agent showed you house you are not obliged to use them to bid
1 vote Thank Flag Link Fri Apr 19, 2013
Thank YOU! this is great to know!
Flag Sat Jan 10, 2015
@ Mack - you mean you're not my BFF in real estate?!?!?

@FSBO - the fact is that if a total stranger came to you and asked, or more accurately in this case, expected you to give them $18,000....you would laugh and tell them to go away. How is your scenario here any different? What makes you special and deserving of a different response?
1 vote Thank Flag Link Sun Jul 15, 2012
I am curious - how is it illegal if an agent decides to reduce their commission at some point in a transaction?

In NY, is the signed listing contract and stated commission written in stone?
It can't, with mutual consent of all parties, be amended (ie: reduced)?
1 vote Thank Flag Link Sat Jul 14, 2012
Here we have someone who is essentially saying, "because I'm coming to your buyer unrepresented, you don't deserve the commission that the seller has agreed to pay you."

I'd like to suggest that it's okay for the listing broker and the buyer to have different objectives in a real estate transaction.

Real estate brokerage is a business, licensed by the State because it is a business - we broker real estate for money, not for community service. While I don't expect the General Public to reach for a tissue over this, it is a business that has been especially hard-hit through the downturn.

I suspect that residential real estate brokers, who collectively have done as much as they could over the past several years to pretend that we are not "salespeople" (even though it says so on many of our licenses) - even going so far as to call ourselves Marketing Specialists or Consultants or Your Friend In Real Estate, just do not feel comfortable negotiating on their own behalf.

I don't much care whether fsbo thinks that the listing agent deserves to keep the commission that the seller has agreed to pay them. I will point out that if you try this in some other percentage-based venues, such as an auction house, they will tell you "no." Politely, but, "no."

Go to Christies and try to pick up a nice $600,000 antique. They'll tack 10-15% on top of that as a buyer's premium, and you can tell them how you didn't need a representative to call you up and find you as a client, they'll still tack it on. And the seller will be paying 20-30%, and you can't get your hands on that, either. Go ahead, ask them - "What would you rather have, $100,000 in commissions or an unsalable bric-a-brac in your warehouse?" They'll tell you, "Goodbye."

Yet, when an unrepresented buyer comes to our listing, we seem awfully eager to say, "Yes!"
1 vote Thank Flag Link Sat Jul 14, 2012
Typically when I list a home if we enter into a Dual Agency (w/o a buyer) I set a price at 1 to 2 points lower than the original commission. Remember most people need a buyers agent. That buyers agent works hard for their clients. There is more than just going on the internet to find homes and it will take you much longer due to lack of updated information out there. It is not in the buyers interest ever to not have a buyers agent. Sellers agents loyalty lies with the seller not the buyer. If the sellers agent enters into a dual agency that agent has to do twice the work. So your thinking is wrong. Do you work for free or when you work harder do you expect less pay? Ask yourself and please be fair!
1 vote Thank Flag Link Sat Jul 14, 2012
I think you are asking a good question and it requires thoughtful response. Although I am in Missouri and what you propose is illegal in my state it is not illegal in most other states. It sounds as if you are frustrated with the amount of commissions paid out on a 600k transaction approx. 36k, you view this money as lost equity and you are right! Having stated this Realtors® should be able to earn a living at their chosen profession but I tend to side with consumers on this type of transaction (high end) since most Realtors® will do a HUD transaction for the minimum government fee of 1250.00 (PS this transaction usually requires more work than the transaction you are describing) I see it this way if your state allows “rebates” then hire for a set fee (3-5k is my fee for this type of transaction) a full time Realtor® to work on your behalf; the added expertise will greatly benefit you and you will achieve some of your goals. The second option is to build new construction directly via the builder with no real estate fees. This is not uncommon in my area of the country but I recommend you have your attorney look over any paperwork before signing. The bottom line is a full time Realtor® can provide a valuable service to you and your family in assisting in the process of a home purchase and I would encourage you to use their services but negotiate your own rate for the service. Good Luck!
1 vote Thank Flag Link Sat Jul 14, 2012
First, you will not piss all of us off, just annoy most.... I actually work creative deals with adjusted/negotiated commissions. The best deal I made, I double-ended, and I took no commission....and it was a win-win-win situation.

Second, you missed a salient point - the listing agent's fiduciary duty is to the seller. So, if I am going to work at a lower commission rate, it will be to the benefit of my client, the seller, not the buyer. It then becomes my seller's decision whether or not to accept a lower price since their net cost to sell is reduced. Why would they do that if the asking price is at market value? Your "if" (the seller is willing to discount) is in many cases hopeful. You are not the only buyer out there. Actually, despite your claim, I don't believe you understand what a truly good buyer's agent does, because if you did, there would be no need for your question. Instead, you would be looking for an agent who would provide you with $18k worth of value.

Third, for a listing agent, working with some one who is unrepresented is MORE work, not less. So, unless you are a cash offer with proof of funds on the table at the time of presenting the offer, you probably won't get far. To them, you are just another buyer...and without an agent to help you.

Fourth, if your wife has all this time, suggest she get her RE license and your problem is solved. It seems at this point like you know just enough to be dangerous!

Lastly, it is not your $18k, it is the seller's. You are attempting to insert yourself in the agreement that has already been reached between the seller and their broker and is not really your business. Besides, there is no set 3%. All commissions are negotiated. We are seeing a lot of 2.5% and some 2% in our market.

Now, with all that said, the seller may be able to credit you in the transaction for recurring and non-recurring closing costs. In California, the Buyer Broker agreement allows for the Broker to provide a similar credit by writing in that condition as an additional term. Maybe in NY there is something similar. Good luck getting them to sign it though, especially if it is a big box broker listing the property instead of an independent. But both Paul and Robbie, Brokers from NY, are shutting your idea down.

Good Luck.

CA DRE 01775528
1 vote Thank Flag Link Sat Jul 14, 2012
First off, it's not a "refund" if you're not contracted to pay it.

Secondly, the listing broker only needs to share the commission if they need the help of another agent in finding the buyer. If the listing broker can find the buyer without help, why should they share the commission?

Personally, when representing a seller, I would rather pay another agent who knew what they were doing than give the commission to an unrepresented buyer.
1 vote Thank Flag Link Fri Jul 13, 2012
is it "legal"?...........

well, truthfully, this really isn't about legality.......but, to answer your specific question, yes, the listing agent can certainly reduce his or her commission, and agree to take less, if they choose to do so.

The question is........will they?

the answer is........probably not

I know I wouldn't...........
1 vote Thank Flag Link Fri Jul 13, 2012
You can do whatever you want. The listing agent has no obligation to you if you one to them I represented. Entering a transaction untepresented is not a great idea consider the amount I money involved in buying real estate. You can call long island board of realtors to ask your question. The number is (631) 661-4800
1 vote Thank Flag Link Fri Jul 13, 2012
highly illegal in most states. It's considered compensation and that can only be given to a co op agent or another licensed agent. There are some exceptions in some states for attorneys. I'm licensed as a broker in one state and sales person in another that the border runs through the middle of the city. Missouri is strict when it comes to a listing agent. you cannot compensate, kickback or enumerate anyone outside of the listing agreement. Not exactly sure if you can even give a buyer or seller house warming gifts without it being declared as income for the recipients. Its kind of like the Sarbanes Oxley law. Kansas is a little less strict but its also financially broke so I'm sure that will change as well.
Second point: if you work a deal were the commission is lowered to make it work for the buyer while an exclusive listing agreement is in effect and the sellers won't agree to the buyer's offer, aren't you in reality making a deal with the buyer while having fiduciary duty to the seller. After all, they're not making anymore. The seller just isn't going to sell it maybe but again isn't that lost taxable income that the seller's agent give up to the financial gain of the buyer or money he would need to make it work that is in effect goes untaxed income. It's not a easy yes and no so check with your board. You may be surprised. It's changed dramatically in the past 2 years.
0 votes Thank Flag Link Tue Jan 6, 2015
Forget about it!
This question is about a year old, and surely Fsbo has gotten his "just deserts": I hope so!
0 votes Thank Flag Link Sat May 11, 2013
I hear what you're saying. My company is a flat-fee Exclusive Buyer Agency. We charge one fee regardless of the sales price, and the remaining is rebated to the buyer per their lenders instructions.

It's really no more work for me to help someone buy a $800,000 home than it is a $200,000 home. Yes, it is limited service. The showing of 10 homes is including in our fee, and we charge $75/house for each additional showing. The business model has worked out great for us.
0 votes Thank Flag Link Sat May 11, 2013
Follow in the foot steps of most people. Use an agent for their time, gas and hard work then disappear they get nothing your get everything. It seems to work well for 90% of the buyers I know or should I say knew.

You can ask for a reduction in the listing price for what you want to save but it does not mean the agent will present your offer to the client or that the seller will agree. Either way the agent will get 3% or whatever was agreed before you stumbled into town. Furthermore, most people purchasing a home for 600k in NY has at least a lawyer that will write up a contract, or you can save more and get a contract your wife writes insured.

BOTTOM LINE:You can make an offer on any home for any amount even if the home is not for sale with pen and paper but you will not "EARN" any money. Don't expect the homeowner to start packing after seeing a post-it with your name number and amount you are willing to pay on their windshield, but the more attractive the offer the more likely they are willing to listen. Proof of funds, certified check from local bank and your willingness to take the property "as-is" may make any homeowner consider selling to you. You take the risk of liens, defect and a seller that take your money but never transfers the title or pays off the current mortgage but at least you save time and give your wife who is obviously very bored something to do. Good Luck
0 votes Thank Flag Link Sat May 11, 2013
Not in NY. It's illegal - a kickback. There are legal ways to work around this.
0 votes Thank Flag Link Sat Jul 14, 2012
No. They negotiated the price before you were even in the picture. They are also prohibited from doing anything that may look like a" kick-back ".
0 votes Thank Flag Link Fri Jul 13, 2012
Bottom line, no if the listing agent presented the offer on your behalf that agent will receive both sides of the commission (listing and selling). if you wanted to save money, you should have hired a good buyers agent that will negotiate on YOUR behalf not the seller. Probably would have saved more than 3%. And no, I am not "pissed" off, but doing it your way did not save you money. It also did not save you time.
0 votes Thank Flag Link Fri Jul 13, 2012
What you propose is totally unethical. Moreover, you greatly increased the amount of "work" for yourself and your wife for no good reason. An agent would have done all that "work" you mentioned, and likely a whole lot more, at no cost to you. Good luck!
Web Reference: http://www.bverealty.com
0 votes Thank Flag Link Fri Jul 13, 2012
Only a Licensed Real Estate Agents can legally receive a commission for a real Estate Transaction. You can do the work, but the Sellers Agent has no obligation to you. If fact if he gave you any fee at all, he could lose his license. Commissions or a fee can only be given to a Licensed Agent, by law.
0 votes Thank Flag Link Fri Jul 13, 2012
If you know Realtors that well, you will know that it is an opportunity for a Realtor to take at least double the commission by selling it themselves.

No, you will probably not get a kickback.

The Seller already has a contract in place regarding how much commission they are paying out; that will probably not change and certainly the listing agent won't want it to change...it is contractual.

If you don't have a buyer's agent to protect your interests, the selling agent (who represents the seller and not you) will keep the full commission.

Hire a Realtor!
0 votes Thank Flag Link Fri Jul 13, 2012
No....the representing agent keeps his/her commission because essentially they represented both buyer and seller.
Buyers agents are a good defense that is too often overlooked because of that reason exactly...consumers think they are saving money when essentially they're speaking to the agent who's representing the seller.
Best of luck
0 votes Thank Flag Link Fri Jul 13, 2012
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