Home Buying in Fremont>Question Details

Sumukh, Real Estate Pro in Fremont, CA

Can a real estate agent credit her commision toward the purchase price of her home?

Asked by Sumukh, Fremont, CA Wed Dec 24, 2008

If an agent is buying a house and wants to credit her 2.5% to the buying price , can this be done and how.

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Sumukh, it would be better to get an agreement to reduce the sales price by the 2.5% amount. -Steve
1 vote Thank Flag Link Wed Dec 24, 2008
Doesn't sound good if you are concerned your broker may not approve.
Many brokers have specific rules about how an agent can handle their own property investments and/or sales.
You should speak with your broker. There may be a way to work it out that meets your needs.

Good luck,
CJ
1 vote Thank Flag Link Thu Dec 25, 2008
Sumukh:

I agree with everyone below – it sounds like you might be a newer agent and have some basic questions about how the purchase agreement is supposed to work – especially when buying a home for yourself.

I agree with the rest that you must discuss this with your broker – they can walk you through the entire contract. However, there are some things you can do to address your first question:

1. If you are a licensed Realtor and the home you are buying is for your personal use, you must disclose this somewhere in the contract. Page 6, Section 25. D. is normally where this happens. If you don’t have enough room there, use a standard addendum and state in Section 25. D. “See attached Addendum #1 for further details. Put all the items on the addendum.

2. If you wish to deduct your commission from the purchase price, you must have your broker’s permission because it will affect your split arrangement with your broker. Some brokers will let you buy and sell personal properties with no fee. Other brokerages charge a fee for any number of reasons. If you deduct the entire amount of your commission from the sales price and your broker still wants a piece of the transaction, you will have to pay your broker directly in some way.

3. It is wise, as a Realtor, when buying properties for you or your portfolio, to deduct your commission so that (1) you don’t pay income taxes on it, and (2) you don’t pay property taxes on the additional amount.

If your broker allows you to purchase a personal property without any fee, then simply use a Cooperating Broker Compensation Agreement and Escrow Instruction Form (C.A.R. Form CBC) to change the commission structure to you and your brokerage. On page 6 of the Purchase Agreement, Section 25. D., include a sentence such as the following:

“In lieu of commission paid to the selling brokerage, purchase price to be reduced by the amount of the commission. See attached Commission Agreement CBC.”

Good luck!
Web Reference: http://www.carlmedford.com
1 vote Thank Flag Link Thu Dec 25, 2008
You must have broker permission!
1 vote Thank Flag Link Wed Dec 24, 2008
As long as the credit is disclosed, this is normally not a problem, it would normally be disclosed as an addendum, so that both buyer and seller are aware of it, But you also need to disclose that you are an agent who is buying the property.

Regards

Harry Ashley
Broker Associate
Hawk Beach Realty
2 Jungle Hut Rd,
Palm Coast, Fl, 32137
Cell: (386)-931-6054
Fax: (866)-793-2579
http://www.palm-coast-flagler.com
1 vote Thank Flag Link Wed Dec 24, 2008
Sumukh, I would suggest you sit down with your Broker and cover all your questions.
1 vote Thank Flag Link Wed Dec 24, 2008
The procedure for doing this should come from your Broker of Record as office policies may be in place to address this situation.
1 vote Thank Flag Link Wed Dec 24, 2008
IF all parties agree then there should not be a problem if you reduced price of home for your sales commission. Speak your broker determine all "i's dotted and t"s are crossed."

Many agents find homes brokers usually agree as long state standards, lender approval.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Thu Dec 25, 2008
Wow thanks a lot everyone , This really helps . I'm going to talk to my broker soon. The listing agent is fine with this. The reason I do this is because in the end my commission and a lot of fee's
is only about 40% and then taxes .
0 votes Thank Flag Link Thu Dec 25, 2008
cool , also in anyones experience , is it common for sellers to ask for the appliances ( fridge/ washer/ dryer) and for the buyer to agree to abribtation clause- what does this mean ?
0 votes Thank Flag Link Wed Dec 24, 2008
Thanks Steve
How should the agent go about doing this ?
-Is there a form or should it be put in a counter offer?
Do we have to go through the broker - - My broker may object =| - is there a form to ask , or just a simple agreement in offer
0 votes Thank Flag Link Wed Dec 24, 2008
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