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Skip, Home Seller in Sudbury, MA

Does the buyer's broker commission come out of the seller's asking price?

Asked by Skip, Sudbury, MA Fri Mar 20, 2009

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Let's face it, the selling price of the home has everything to do with everything -
The listing contract with a seller specifies the fee that the listing agent will receive and from that fee, the amount promised to a buyer's agent. If this amount covers or exceeds the buyer's broker contracted fee, the buyer then owes his buyer agent nothing else out of pocket. If the fee promised by the seller or his agent to the buyer's broker is less than what he or she has agreed to in the buyer contract , the buyer may ask for the seller to pay this difference , and present it as a condition of the offer. If the seller refuses, there are a number of possible scenarios. The buyer may decide to reduce his offer to allow for this difference, or perhaps go find another house where the fee is fully covered, or decide to pay the difference to his buyer agent out of pocket - it all depends on the circumstances. It is also possible that the buyer broker will reduce their fee, but very unlikley. If you are selling a home without the benefit of Realtor representation, the buyer will likely expect to pay less for the house - the buyer's agent will and should probably ask a seller before showing the property if the seller is willing to pay the buyer's broker fee. But the contract with the buyer's agent is between the buyer and his or her agent and the seller is technically not a party to this contract even though the listing agent with the seller's permission, offers the cooperting fee to the buyer's agent.- but as with any sale,if a seller wants to sell, and the buyer wants to buy, then it all boils down to the bottom line doesn't it? - when there are many homes to choose from , the buyer and the buyer's agent will seek out the homes that meet the buyer's needs but also require the least out of pocket expense for the buyer. In the Metrowest area, the buyer agent fees are most often covered by the fee paid to the listing office and this fee is based on the final sales price.(unless the buyer agent contract specifies additional fee for services compensation in addition to the coopertaing fee) In the present market , it would be wise for a seller to attract as many potential buyers as possible so removing the anxiety or stress of how the buyer will compensate his or her broker increases the amount of interest in the seller's home, usually resulting in a quicker sale and more money in the seller's pocket.
0 votes Thank Flag Link Sat Mar 21, 2009
Skip,
The theory is that the valuation of a home includes all fees necessary to facilitate a sale. Homes don't typically sell by themselves, there is work to do....marketing, showing, negotiating, paperwork and closing actitivites, etc.

If, for some reason you're able to sell your property without assistance of any kind, one of the parties will realize there is some money to save; may be you, may be the buyer. In effect ,the sale price will be lower, no doubt about it.

In a traditional situation, the listing agent charges a seller a full commission in order to offer out part of that fee to a cooperating broker. In the old days before buyer agency, that coop fee was paid to a sub agent , who represented the seller and the selling agency. Now, you see almost all cooperative agents acting as facilitators or buyer agents. Our MLS rules require listing agents to offer cooperating compensation of some kind when filing a listing with the service. If you selling yourself, you can make the rules. If you do go it alone and a buyer broker procures a buyer, they can certainly get paid by the buyer but the buyers offer will certainly reflect it.

Who pays the commission is a great argument. The Seller can insist it's them because the broker fee is broken out as a Seller expense on the HUD1 settlement sheet at closing. The Buyer can insist it's them because they are writing the check. In the end, I wouldn't get hung up on it because your net proceeds will be the same no matter who pays.

Hope that helps. If plan to list and haven't found an agent, I can refer someone to you. Good luck.

Darlene L. Sodano, GRI,CBR,e-PRO, SRES,LMC
Immediate Past President of North Central Mass. Assoc. of REALTORS®
Licensed Broker in MA & NH
ph. 978-597-0037
0 votes Thank Flag Link Sat Mar 21, 2009
All fees come "out of" the ultimate selling price.
0 votes Thank Flag Link Sat Mar 21, 2009
When a seller retains an agent to market their property they agree to a commission as part of the contract. If the listing agent is the only realtor in te sale then he is entitled to the entire commission. if another agent particiaptes in the sale the listing agent will pay him from his total commission. it never costs the seller more than he/she agreed to pay. but in no case does it entitle the seller to an automatic reduction of 3 per of the commission.
0 votes Thank Flag Link Sat Mar 21, 2009
In MA, when a seller hires their agent to list and sell their property, they agree on a fee that usually equates to a % of the sale price. The agreement can also states that the seller’s listing agent may call upon other licensed agents to sell the property too, (but no one else can list it) by posting the property listing into the MLS (Multiple Listing Service). The seller and listing agent will also agree what the compensation to this second agent will be (Buyers Agent). This is typically backed out of the % agreed upon to list and sell the house. This amount is paid by the listing agent to the selling agent (buyers agent) upon closing. But in essence, yes, the seller pays the buyer agent.

~M
Web Reference: http://MelissaBMancini.com
0 votes Thank Flag Link Fri Mar 20, 2009
Loaded question... it really depends on the Contract the Agent has with the Buyers. 95% of the time the buyers agent will accept compensation from the seller in the amount they are willing to offer. In some cases the buyers agent is asking from the buyer a higher amount than the seller is willing to compensate. In that case they may have permission to go to the seller and ask for more.

I would say at least 95% of the time the compensation a seller is offering a buyer's agent is enought to make everyone happy.
0 votes Thank Flag Link Fri Mar 20, 2009
Skip,

As previously mentioned, the fee for professional services is normally paid for from the seller's proceeds at closing.

Good luck
0 votes Thank Flag Link Fri Mar 20, 2009
The buyer's broker fee is paid to the buyer's broker from the seller's (listing) agent at closing. The commission is pre-negotiated between the seller and their broker.The seller's agent has also previosly agreed to (and is contracturaly obligated) pay any buyer's agent a portion of their commission via the MLS if they bring a buyer. Since the seller pays the full commission you can be almost certain they have built that $ back into the homes listing/asking price. It's important to remember this when negotiating the price of the home.
0 votes Thank Flag Link Fri Mar 20, 2009
Hi Skip,

The answer is it depends. Some unrepresented sellers (FSBOs) offer a commission to buyer agents and some don't. Almost all sellers represented by an agent offer a commission to buyer agents. However, what a seller is offering to a buyer agent may not be sufficient to cover the commission owed to the buyer agent.

Many buyers contract with a buyer agent to find them a home. The terms of the contract are negotiable, but the buyer owes their agent a commission for some amount or percentage when they find a property and it closes. Any shortfall between what the seller is offering and the buyer has agreed to pay in their buyer agency agreement is owed from the buyer to their agent.

You can follow the link below to learn more about buyer agency agreements.

Chris
0 votes Thank Flag Link Fri Mar 20, 2009
Hi Skip,

When you list your home with an agent, the agent offers part of their fee to the buyer's agent/broker. It is based on the selling price (which may not be the listing price).

The buyer may also pay an additional amount to their agent - it depends on what the buyer and their agent have agreed to.

Hope that helps. Marilyn
0 votes Thank Flag Link Fri Mar 20, 2009
If this is a real scenario, ongoing, we need more info to answer your question. If you are seliing on your own - were you offering compensation to a selling/buyers agent. If so, was an amount specified. If not, when the offer was made, was there any provision in the offer for agent compensation?
0 votes Thank Flag Link Fri Mar 20, 2009
I am a realtor and the norm is that the Seller pays the commision to the buyers agent.
0 votes Thank Flag Link Fri Mar 20, 2009
Skip-
Typically the buyer's broker commission come out of the seller's proceeds. The seller pays the full commission to the listing broker, who in turn pays the buyer's broker.

Typically....

Mike
0 votes Thank Flag Link Fri Mar 20, 2009
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