Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm thinking I should have phrased the question differently. Probably what I was looking for was something along the lines of "if a seller or buyer asked you who pays the commission, what would you tell them".
Part of this is prompted by some comments that seemed to call in to question an agent who would present the commission to a buyer as an expense of the seller as being "less than honest".
I'm thinking I should have phrased the question differently. Probably what I was looking for was something along the lines of "if a seller or buyer asked you who pays the commission, what would you tell them".
Part of this is prompted by some comments that seemed to call in to question an agent who would present the commission to a buyer as an expense of the seller as being "less than honest".
I'm still a little cloudy on the confusion.
Are you of the opinion or responding to those that are of the opinion that the commission costs of the seller are passed on to the buyer, at least in part? And you want to inquire with others if they believe this also?
That would make more sense, I think. As of right now, this thread is a little cloudy.
As I said, the broker commission shows up on the HUD as an expense to the seller, not to the buyer. Let's take a purchase of $100K. The buyer pays the seller $100K. The seller then takes that money and pays his bills. Just like he does when he gets a paycheck. It doesn't matter that the payment of that bill appears on the same accounting document as the income. The buyer doesn't sign the listing contract and doesn't owe the broker for the commission. Only the seller owes this money.
It is not a red-herring, with all due respect, to equate this to a paycheck. How about this analogy. An employee (i.e. the seller) receives a paycheck that shows a gross income (i.e. the purchase price) and a deduction for income taxes (i.e. broker commission). I doubt you can find me an employee who will agree that his employer (i.e. the buyer) paid his taxes for him. The money comes in, the money goes out. But, once the money comes in, it's your money and the money that goes out is your expense, not the person's who gave you the money in the first place.
I don't mean to be a jerk but I really think that people who argue that it's a buyer expense are over thinking what is a simple set of associated, yet different, transactions.
I would think if it is a Seller expense, more Sellers would show P.O.C. on the HUD. Then it would not show up in the Buyers loan. The only reason it is on the HUD is to affirm to the Buyers lender that funds for the Buyers loan are being handled properly.
Now, if the Seller puts a roof on to sell, why is THAT expense not on the HUD? Should it be? It is truly a Seller expense for services rendered.
BTW, I think you can find millions of Americans who actually believe that their employer pays half their Social Security Tax and their Unemployment Compensation Tax,
I'm thinking I should have phrased the question differently. Probably what I was looking for was something along the lines of "if a seller or buyer asked you who pays the commission, what would you tell them".
Part of this is prompted by some comments that seemed to call in to question an agent who would present the commission to a buyer as an expense of the seller as being "less than honest".
Manderly,
To clarify, I think it is misleading to tell Buyers that Buyers agency is free to them, costs them nothing, as a marketing ploy to gain Buyers.
OK, I think I made a small leap in my logic since the poll only offered Buyer or Seller. I took that to mean that we were talking about a "typical" transaction, as we all know them. I completely agree that there may be circumstances, however rare, where the buyer pays the commission or the commission is split between the two. I still maintain that the representation on the HUD is the answer to the question because any other circumstance is a violation of federal law.
Come on - it's "baked in" just like with any commission based sale... What seller of anything doesn't account specifically for commission paid out when calculating the bottom line of the transaction? Thus how is it not simply an expense of that transaction and ultimately absorbed by the proceeds/funds from the buyer?
It gets real cloudy when sellers have to bring money to the table, but we all know how they feel about that.
As I said, the broker commission shows up on the HUD as an expense to the seller, not to the buyer. Let's take a purchase of $100K. The buyer pays the seller $100K. The seller then takes that money and pays his bills. Just like he does when he gets a paycheck. It doesn't matter that the payment of that bill appears on the same accounting document as the income. The buyer doesn't sign the listing contract and doesn't owe the broker for the commission. Only the seller owes this money.
It is not a red-herring, with all due respect, to equate this to a paycheck. How about this analogy. An employee (i.e. the seller) receives a paycheck that shows a gross income (i.e. the purchase price) and a deduction for income taxes (i.e. broker commission). I doubt you can find me an employee who will agree that his employer (i.e. the buyer) paid his taxes for him. The money comes in, the money goes out. But, once the money comes in, it's your money and the money that goes out is your expense, not the person's who gave you the money in the first place.
I don't mean to be a jerk but I really think that people who argue that it's a buyer expense are over thinking what is a simple set of associated, yet different, transactions.
Are brokers comissions paid before or after the funds are released to the seller?
If they are paid after(they are), how can the seller pay a comission with money he does not have yet?
Are brokers comissions paid before or after the funds are released to the seller?
If they are paid after(they are), how can the seller pay a comission with money he does not have yet?
I don't think it makes a difference. Are you saying that the buyer also pays the sellers prorated taxes? HOA fees? The balance of the seller's mortgage? Those all come out before the seller gets their check. Are you telling your buyers that they are paying for both their portion of the taxes AND the seller's portion of the taxes, plus all the seller's other stuff that comes out? I'd love to hear that conversation.
I generally consider it a seller expense but an argument could be made either way.
It shows up on the seller side of the HUD. It comes out of the sellers equity. They are paying the full x%. The price of the home is the same whether there is a commission or not.
It is buyer representation rolled into the loan they are getting. If there was no agent the home could be sold for the same net minus the commission.
Pick your poison, I lean toward seller side though. I'm not sure it really matters at the end of the day.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
