Home Selling in Greenwood>Question Details

Lonnie, Other/Just Looking in Greenwood, SC

Agent adding contingency to increase percentage of commission

Asked by Lonnie, Greenwood, SC Mon Jun 30, 2008

I am selling my home and received a contract on the home and accepted all buyers’ terms. I did not accept the term where the buyers agent requested an additional percentage for his commission. The agent told the buyer that I did not accept the contract. I later asked my agent if I could do a bonus so that both agents would get the same cut on the sale. The buyer’s agent agreed to the bonus amount and without hesitation stated that we now have a contract on the home. My agent was looking into this practice and did not incourage me to add the bonus, however I was pleased with all the other terms.
IS THIS BLACKMALE? Is there anyone I can report this too? By doing the bonus check am I rewarding this behavior?

Help the community by answering this question:

Answers

9
Lonnie, I'm not going to comment on the "bonus" because I don't have enough information from you, but I am going to comment on the commission itself.

A buyer agent came and expected to be paid his fee. The buyer pays it, but it is included in the offer. You disputed that. If the buyer's agent hadn't come, you wouldn't have a buyer, correct? Wouldn't you rather pay the buyer's agent his additional 1%(?) fee than not sell your house?

Say you go to work one day. You are paid $800 a week. You have a contract that states that. At the end of the week, your boss says one of the clients wants to pay less for your product, so you are going to have to take a pay cut. What is your response?
2 votes Thank Flag Link Mon Jun 30, 2008
Lonnie,
I think this situation was handled badly. The buyer could have agreed to pay his agent more than your co-op without involving you at all.
In California the co-op fee cannot be a factor in how an agent represents a client in a transaction. Any negotiation has to be done between the brokerages. In this case though it was placed in to the contract, inflating the offer price. As long as you countered and they countered your counter offer it is not blackmail. Remmeber that the buyer is the party bringing the money to the table and as long as you are satisfied with your net proceeds it really doesn't matter.
I had a situation where the I offered on a proerty and the seller counterd that I'd have to accept a lower commission than what was in the MLS. Obviously my client offered less tahn asking. My client looked at me and asked can the seller do that and I had to reply that "it could not be a consideration in how he procedded".
1 vote Thank Flag Link Tue Jul 1, 2008
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
Contact
Lonnie, just FYI, part of my listing presentation is the fact that if we don't offer a "good" selling percentage, it is very likely a buyer's agent will include it in their offer. I'm sorry your agent didn't alert you to that eventuality.

And yes, as another agent pointed out, commissions are not do be renegotiated in an offer, but there are ways for wording the offer.

None of this is to say what the agent did was OK, just that it is not unusual or blackmail to include the buyer's agent commission in the offer.
1 vote Thank Flag Link Mon Jun 30, 2008
The buyer can simply pay the buyer agent directly and pay less in the purchase price to the seller. What's the difference to the seller if it is included in closing as long as the net is the same?

Personally, I prefer to have it included in the closing. I prefer to have all money exchanges that take place at the time of closing to be accurately reflected on the HUD. It makes for a more transparent transaction.

A seller can insist that it not be included in the contract, and a buyer can simply adjust the offer price accordingly.
1 vote Thank Flag Link Mon Jun 30, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Thank you JR for your answer, I guess the problem I have is that the buyers agent refused to present the contract back to the buyer and appears to be working not for the buyer's best interest but his own self interest.

JR: Here we use attorneys so that wouldn't happen here.
~~~~~~~~~~
The commission for the sale of the house is listed upfront on the MLS and he did not have to show the house if he wasn't happy with his share.
JR: Buyer's agents work for the buyer, in their best interest. Therefore they will show any house that fits their buyer's needs and then either include their fee in the offer or have the buyer pay.
~~~~~~~~~~~~~~
The buyer is the customer and without the buyer he would have zero!
JR: That I don't have verification of. Was the buyer the customer or the client?
~~~~~~~~~~~~~~~~
I work with contract prices for consulting services and yes sometime I do have to accept less and other times I get a little more. Bottom line I work for the client and build my reputation on that.
Thank you again for trying to help me see a differnt side.
JR: Sometimes agents have to accept less also.
You're welcome. :)
1 vote Thank Flag Link Mon Jun 30, 2008
It doesn’t sound fishy to me. I do not have all the facts, but from what I read, it seems this is what might have happened….

Buyers agreed to pay buyer agent “X” which was a higher number that you, as a seller offered in your co-op. We’ll call your compensation offer “C”. The offer was written and presented to you with the inclusion that you pay, from the proceeds at closing, the difference between your offer amount, “C” and “X.

This is really not any different that a buyer submitting an offer to a seller and requesting the seller to pay the points on a loan on behalf of a the buyer. Yes, the seller can say no to paying the buyer agent commission, but I don’t recommend it.

If the buyer has an agreement with the buyer agent to pay “X”, that will be paid at closing, or outside of closing. The buyer has already committed to the agent. Sure, the buyer can pay you less, and pay the buyer broker the difference directly. But, you, as a seller, have made it more difficult for the buyer, without any real possibility of gain. The buyer will simply negotiate further on the sale amount with you.

The buyer determines the most he/she will pay to acquire the property, and your property sufficiently meets the expectations required to do so or not. You, as seller, will sell for the highest and best price the market can bring you from the marketing and representation you have, or you will remove your property from the market and won‘t sell. If the offer presented to you represents the highest and best price you will get, why would you turn that away?
1 vote Thank Flag Link Mon Jun 30, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
I don't know real estate law in your area as well as I do in AZ, but here it is illegal to have the commission play ANY PART of the negotiation between Buyer and Seller. I would check with you states Board of Real Estate and make sure his practices were legal. Without knowing the entire story, of course, it's hard to know exactly what happened...but sounds fishy to me....
1 vote Thank Flag Link Mon Jun 30, 2008
Thank you JR for your answer, I guess the problem I have is that the buyers agent refused to present the contract back to the buyer and appears to be working not for the buyer's best interest but his own self interest. The commission for the sale of the house is listed upfront on the MLS and he did not have to show the house if he wasn't happy with his share.
The buyer is the customer and without the buyer he would have zero! I work with contract prices for consulting services and yes sometime I do have to accept less and other times I get a little more. Bottom line I work for the client and build my reputation on that.
Thank you again for trying to help me see a differnt side.
1 vote Thank Flag Link Mon Jun 30, 2008
Thanks Deborah,
Being the seller and neogoiating a commission with the agent, I guess I just did not expect to have to be approached on this subject again. These fee's should be discussed with the buyer and then the buyer should turn the contract down if the contingency is not accepted by the seller. In this case the buyers agent turned the contract down.
Regardings JR's response - the buyer agent is working for the client (Has an established relationship).
Thank you all for helping me understand common practice. I will be the buyer soon and will be very selective of the agent in hopes that I or the seller will not be caught by surprise by this.
0 votes Thank Flag Link Mon Jun 30, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer