Home Buying in Madison>Question Details

Bill E, Home Owner in Madison, WI

Why did the agent include a bigger commission and an extra fee ?

Asked by Bill E, Madison, WI Tue Jan 7, 2014

Agent wrote an Offer with 3.5% commission and a $295 fee instead of what was offered in the MLS listing. What makes that OK or how can that be justified?

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Say Hi to Charlie for me, if it is him. Likely the agent feels he is worth that and has his buyers are convinced so. You can counter it out, work it into the price or let him have it.
0 votes Thank Flag Link Tue Jan 7, 2014
Company Policy from the first people to put a grill on your deck
Flag Tue Jan 7, 2014
Bill,

If you are the seller and the buyers agent put this in the offer just counter offer with terms that are acceptable to you. If the buyers agent wants more than you agreed to offer in your listing agreement and stated in MLS let the buyers agent work that out with their buyer.
0 votes Thank Flag Link Tue Jan 7, 2014
Perhaps the Buyer's Agent is dealing with a FSBO or limited service agency and will have to perform services normally provided by a full service Listing agent. In that case, the agent is more than justified in asking for additional monies to fairly compensate them. Every transaction is unique and if there is no agent on one side, that side should reconsider their position and either hire a competent agent or a knowledgeable, experienced attorney
0 votes Thank Flag Link Tue Jan 7, 2014
Well said, Eric.
Flag Tue Jan 7, 2014
Bill:

Why don't you ask the buyers agent about this? Also, what do you mean by "open market listing?" Are you selling the home yourself or are you represented? If so, why don't you ask your agent? Offhand, the two most common reasons for a 3.5% buyers agent fee are 1) the property is not listed (for sale by owner) and the buyer agent will have more risk and more work to do and 2) the buyers agent is skilled enough and provides higher value so they deserve and demand it. This is a major transaction. Do you go to the cheapest heart surgeon? Also, it is unethical to only show your broker's listings to a buyer.

Alex
0 votes Thank Flag Link Tue Jan 7, 2014
Ask the arrogant Buyers Agent why they are a better heart surgeon than the other 2000 heart surgeons? The best part of this is that the extra commission and fee is going to put this Offer out of the running. No counter, no opportunity to do the right thing for their client. Zip Zero Nada. Is that the SKILLS and HIGHER VALUE you are referring to? Is it unethical to pay the agents extra to sell in-house listings? What is more important: Agent Pay or Buyers Choice? Does additional compensation make the Agent more effective? If yes, then the Broker is trying to get their agents to do what the BROKER wants over what the BUYER wants. So Broker Interest comes ahead of the legal, ethical, moral, contractual obligation that a Buyer Agent supposedly has to their client?
Flag Tue Jan 7, 2014
Bill,

Listing contracts are set between the Seller and the real estate company. The Seller agrees to pay the listing company x% to sell their home. The contract is not between the Seller and the agent, it is between the Seller and the real estate company. The listing company then sets the commission split between themselves and the company whose agent brings the buyer. . The average for our area is 3 - 3.5% but nothing is set in stone.

The Offer to Purchase is a separate contract from the listing contract. The buyer's agent has a Buyer Agency Agreement with their Buyer. If the Buyer has agreed to a 3.5% BA fee, then the Buyer can ask the Seller to pay that full amount. It's up to the Seller to decide if he/she is willing to pay this. They can stick to what their listing Company is offering or they can agree to pay the higher amount. Sometimes its in the Sellers best interest to pay the extra if its a great offer. If that's not the case, then you can have your agent negotiate a higher asking price to cover the extra fees or you can have your agent counter them out. It's entirely up to the Seller to decide.

As far as the "extra $295". That is a transaction fee which most companies charge on the Offer. Most are between $295 - $495. This also can be negotiated out of the contract. Again it is up to the Seller to decide if he wants to pay this.

It's your agent's job to negotiate for you so discuss with her/him.

Sincerely, Donna & Dan
0 votes Thank Flag Link Tue Jan 7, 2014
so what is the point of putting in any commission at all? Why not Offer ZERO and let the Buyers Agents set their own rate? The fee is a JOKE. Like the difference between paying a percentage AND a fee on top of it is too much math?

From what my realtor friends tell me, this 'transaction fee' is not what most companies charge. It is just extra commission. It drives up the cost for Buyers and/or Sellers. It is a hidden fee, a blatant money grab and part of what gives realtors a slimy reputation. Making thousands of dollars isn't enough, throw in another $295 ~ $495 because I am so great. This agent won't get the Offer accepted because the Offer included more than $1000 in "Extra Commission". I guess 3.5% of nothing is still nothing…never mind the insulting $295 that won't get paid either.
Flag Tue Jan 7, 2014
Bill,
From what I can read YOU ARE THE BUYER.
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When you met up wih your agent he/she asked you to sign a exlusive buyer agreement. This agreement will have specified the miniamal compensation your agent requires. Also discussed at this time would be the options avaialble to you.
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#1. Did you sign this agreement?
#2. Did you direct your agent to 'show you everything' or only what conforms to your expectation?
#3. During that discuss your agents compensation could have been negotiated to limit your costs to ZERO, meaning only the compensation paid by the seller will be considered as payment in full to the agent. (Be aware, some listing provide only $1 in compensation to the agent. That doesn't seem fair...right?"
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Share with us the discussion surrounding the Exculive Buyer Agreement discussion.
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Failing to enter into an EBA and having the discussion puts YOU in a situation completely dependent on the property you choose to make an offer on.
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No discussion took place regarding your agents compensation...I guess you'll have that chat now.

Why did...? you ask.
Because YOU allowed the agent to dictate their compensation at the time of the transaction, not when you hired your agent. Actually you did not hire the agent (no EBA) so the agent is free to apply the full weight of market conditions. That, however, is a fair consequence when working with those who refuse to enter into an agreement designed for their benefit.
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Don't feel badly. There are thousands like you who refuse to sign such contracts and do not benefit from the compensation discussion. If you read my other posts you'll find what I have shared previously aligns PERFECTLY with your experience today.
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Time to have a chat with your agent.
0 votes Thank Flag Link Tue Jan 7, 2014
um. no. But thanks for scolding the everliving skit out of me. But what really happened is that some Buyers Agent wrote an Offer and decided that the 3% Offer of Compensation wasn't sufficient compensation for her level of representation. Maybe, just maybe, her Buyers signed EBA and submitted to her dictated 3.5% …but there are plenty of fish in the sea willing to work for 3%. What I have learned is that the brokerage pays a BIGGER SPLIT on in-house listings and tells the Agents to UP the Commission and include the fee when buying open market listings. Seems like a sleazy way to pay….why is Broker Compensation more important than Buyers being shown all the options available in the marketplace? I mean, isn't that what EBA is all about? Making sure the Buyer is fairly represented ? Seems like skewing the properties shown by the dollar value paid to your EBA flies in the face of putting the Buyer FIRST. Commission First, Buyer Second.
Flag Tue Jan 7, 2014
Some states, not mine, allow commissions to be discussed in an offer to purchase. Those states do allow the commission to be part of the negotiation in an offer to the seller. I feel it is wrong and bordering on GREED pure and simple and the agent(s) that do it are out for one person and it is not you.

Bottom line it is your offer and you can tell your agent to not do that since it affects the sellers decision. I would dump that agent as well as soon as you could.
0 votes Thank Flag Link Tue Jan 7, 2014
"Some stares, not mine..."
Tim, are you suggesting that professional real estate fees are not negotiable?
I've heard thousands of times, "Professional fees are negotiable."
How do you solve the Flat Fee broker who provides one whole dollar to the buyer agent?
Flag Tue Jan 7, 2014
It's the same as the amount of the offer.
You can accept or reject it.
0 votes Thank Flag Link Tue Jan 7, 2014
Are you the buyer or a seller? the seller will sign a listing contract with their listing agent for a stated amount. If any offers come in asking for you to pay more money to a buyer agent, discuss it with your listing agent. If you are a buyer hiring a buyer agent, then find one that is more realistic in their fees instead of choosing the highest paid one. You should have a contract that states what you will pay, you would need to sign it to agree to it. if you dont agree, search for another agent. Commissions are negotiable. Now the lowest one wont be the best for savings as you may get discount services but you should meet in the middle.
0 votes Thank Flag Link Tue Jan 7, 2014
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