Offer contingent on us paying up to 6 % closing cost. Do we also pay 6% commission?

Asked by Holly, Shenandoah County, VA Wed Jul 1, 2009

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Barb Huppert’s answer
Barb Huppert, , Maplewood, MN
Wed Jul 1, 2009
Yes, the 6% commission goes to the Listing Broker and is divided with the Selling Broker, the brokers than pay the two agents from their portion. The 6% closing cost covers the buyers cost of their loan, and various costs to close the loan, there will be other things as well, these are usually mentioned on the Financing Addendum which is attached to the Purchase Agreement. The closing costs will be in a separate section of the HUD from the commission payout. The HUD is the financial blueprint of the closing, if it isn't spelled out on the HUD, it doesn't get paid. Ask you agent to contact the closer for your side to do up a preliminary HUD 1 for you, and then ask him/her questions until you feel satisfied with the answers. It is very common for the buyers to ask for closing costs to be paid by the seller. Congratulations on the sale of your home!
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Marilyn Bell, Agent, Calabasas, CA
Sat Jul 4, 2009
The commission has already been agreed upon. The closing costs are still open to negotiation until both parties sign to agree on a deal.

One quick note, though. You can pay the commission based upon the NET (meaning not an additional $150 as stated below). Check your listing agreement to make sure there's no language to prevent that. You're agent should be agreeable to that if it's not spelled out in the agreement.
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Dan, Both Buyer And Seller, Richmond, VA
Sat Jul 4, 2009
You need to be careful when taking the advice of agents. Listing or selling agents make there money from the SALE of your home. They will do waht it takes to close the deal. With that said, both of the answers above are technically correct. It may be common for buyers to ask for closing cost help but from your point of view you might as well just decrease the sale price of your home. If the buyer needs closing cost help because they don't have the capital, I suggest helping them with these costs but increasing the total sale price. In effect, this allows them to build the costs into their loan that is repaid over 30 years. You still get your money now.
As for commisions, agents serve an important role in real estate for many people but as the seller be aware that you are the only one that benifits from keeping the price up. For example, if you are advised to accept the additional terms of paying cosing costs of, let's say, $5000, you loose $5000 and your agent still gets the same commision. If you adjust your price up, as I suggested, you get your $5000 and your agent gets an additional $150. That seems like a benifit to your agent but more than likely your agent is more interested in ensuring that this sale goes through so they get their 3% on the whole sale. Jepordizing thousands of dollars for an additional $150 does not make sense.

This answer will not be popular with agents. Just remember you represent you!
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Janice Copel…, Agent, Winchester, VA
Thu Jul 2, 2009
Hi Holly, Great questions... and I am sorry that your agent didn't explain these scenarios earlier in the process. When you interview realtors to list your home, you can negotiate the % of commission. If you have already signed a listing contract, and it noted 6% commission, then you have to pay that commission.

It sounds like you have an offer with a contingency of you, the buyer, paying 6% in closing costs. This sounds rather high to me and you may want to consider countering this offer with a counter offer offering to pay either 4% or 5% of the buyer's closing costs.... You are in the driver's seat.

Call me with any other questions at 540-931-5050 if you are not working with a realtor. If you are working with a realtor, ask him or her to help you with how to handle this current offer you have.
Good luck!
Janice Copeland, REALTOR
Skyline Team Real Estate
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