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.
As you may or may not know, I'm a transaction broker down here in sunny Fl so I'm not as familiar with the buyers broker agreements in Ct. I'm refering someone to a Realtor up there. So, the question of commission came up.
The reply was "I charge 3% but if it's 2.5 on the listing then I forgo the .5%" If I find a fsbo my fee is 3%". So I said, which the seller would pay, correct? She said "my fee is 3% the contract is written so I"m covered for my commission".
So, my question is this. If the mls is basically showing listings at 2.5% payout why is the fee 3%? Why doesn't the agreement just say that she would accept the co-broke fee on the MLS or if it's not on the MLS that there would be an agreement signed with the seller to pay up to 3%?
I'm confused. If you are going to forgo a payment of a percentage of a fee, which really is paid by the seller to begin with, what is with the complicated mumbo jumbo? Isn't there an easier way to lock the buyer in without scaring them to death?
As you may or may not know, I'm a transaction broker down here in sunny Fl so I'm not as familiar with the buyers broker agreements in Ct. I'm refering someone to a Realtor up there. So, the question of commission came up.
The reply was "I charge 3% but if it's 2.5 on the listing then I forgo the .5%" If I find a fsbo my fee is 3%". So I said, which the seller would pay, correct? She said "my fee is 3% the contract is written so I"m covered for my commission".
So, my question is this. If the mls is basically showing listings at 2.5% payout why is the fee 3%? Why doesn't the agreement just say that she would accept the co-broke fee on the MLS or if it's not on the MLS that there would be an agreement signed with the seller to pay up to 3%?
I'm confused. If you are going to forgo a payment of a percentage of a fee, which really is paid by the seller to begin with, what is with the complicated mumbo jumbo? Isn't there an easier way to lock the buyer in without scaring them to death?
Am I making sense?
Palmcoasting, can you imagine how confusing it is for the buyer when the realtors have so many different "formulas" for determining their commission and the realtors even get confused? My situation doesn't apply in every state(I'm in Tennessee) but what I do with my buyer clients I believe simplifies the issue as well as locks them in. I use a Buyer Rep Agreement that I discuss and get signed at the beginning of the homebuying process. I make it clear to the buyer that this is an agreement between the buyer and me. In the agreement it states that my fee is a percent of the sales price(usually 3%, but sometimes less). Since the agreement is between the buyer and me I explain that they are ultimately responsible for my 3% commission. However, I also explain that the seller will more than likely pay my commission(based on what the seller is offering or what I negotiate). I have only had one seller who did not pay my full commission, and in that case the buyer paid the remaining 1%. The buyer had no problem with this because they got the house at more than ten percent under the list price and it was something they were aware of from the beginning.
A further note on this. I have had sellers offer more than my stated commission and/or a bonus above my commission. In those situations, anything over the commission I agreed to with the buyers goes towards reducing the house price or to pay closing costs & prepaids.
Bottom line is that the buyer knows what my fee is and who is ultimately responsible for it. Anything we get from the seller that is less, then they make up the difference. Anything we get from the seller that is more, then the buyer gets it.
This is a rather long explanation for a simple and straightforward agreement. However, I have never had any misunderstandings with this arrangement nor have I lost any buyer clients because of it. They also appreciate knowing upfront that they will benefit directly from any buyer agent incentive bonuses.
Thank you for the reply. And yes, when I was speaking with the Realtor for the customer I was confused by it. I personally wouldn't sign an agreement that I had to pay a certain percentage but was verbally told it would be 'forgiven' if the mls co-broke was less. I also wouldn't sign anything that said I had to pay a transaction or filing fee to either brokerage either as I see that as a cost of doing business, but that's me.
I find it humorous that someone gave me a negative rep for asking the question. Just a comment saying 'fool'. *sigh*
Thank you for the reply. And yes, when I was speaking with the Realtor for the customer I was confused by it. I personally wouldn't sign an agreement that I had to pay a certain percentage but was verbally told it would be 'forgiven' if the mls co-broke was less. I also wouldn't sign anything that said I had to pay a transaction or filing fee to either brokerage either as I see that as a cost of doing business, but that's me.
(I find it humorous that someone gave me a negative rep for asking the question. Just a comment saying 'fool'. *sigh*
Palmcoasting, I got a negative rep for responding to your post with the same comment.
Palmcoasting - If this agent had you confused and couldn't explain the potential fees without making you feel like an idiot, then maybe you should consider interviewing a few others before making the referral. A big part of any agent's job should be making the client feel comfortable that their interests are being cared for . . . even if that means patiently explaining things multiple times.
If you're not comfortable with this agent and her explanations, then chances are your clients won't be either.
I do the same thing in my BA agreements, and I put in that anything over the agreed rate is rebated to the buyer at closing.
If the fee is lower, but is within striking distance of my fee, I forget it. But if it's way under, I ask the buyer to agree to pay from the credit from the seller, we asked for in the offer.
I do the same thing in my BA agreements, and I put in that anything over the agreed rate is rebated to the buyer at closing.
If the fee is lower, but is within striking distance of my fee, I forget it. But if it's way under, I ask the buyer to agree to pay from the credit from the seller, we asked for in the offer.
Ok, that's the part that has me confused. Because she pretty much explained it to me that way...not exactly but close.
(by the way, the customers and the agent met yesterday, they love her, so I guess she did a better job with them)
But, explain that to me like I'm a child please. When I lived in NY, there wasn't a 'buyers' broker agreement that needed to be signed...it may have changed since I was there. In Florida, most of the sales associates here are transaction brokers so we don't have agency agreements either.
Let's say most of the co-brokes in the mls are 2.5-3%. You are willing to take the 2.5. Why would I sign an agreement saying I agree to pay you 3% if you are willing to take the 2.5 and 'trust' you not to come to me for it?
And..by 'credit from the seller' are you talking about the reduction in price that is negotiated? Trust me, I'm not saying how it works is incorrect, I'm just looking to understand the whole thing. I had to interview agents for two different referrals in two different states, both up north, both states utilizing buyers brokers. Each of those agents pretty much said the same thing...they sign an agreement for such and such but if the commission is close I forego it if it's not they make it up. Since it seems to be the general or accepted practice to do that, then why isn't that written in the agreement some how... like a range of commission or something?
As you may or may not know, I'm a transaction broker down here in sunny Fl so I'm not as familiar with the buyers broker agreements in Ct. I'm refering someone to a Realtor up there. So, the question of commission came up.
The reply was "I charge 3% but if it's 2.5 on the listing then I forgo the .5%" If I find a fsbo my fee is 3%". So I said, which the seller would pay, correct? She said "my fee is 3% the contract is written so I"m covered for my commission".
So, my question is this. If the mls is basically showing listings at 2.5% payout why is the fee 3%? Why doesn't the agreement just say that she would accept the co-broke fee on the MLS or if it's not on the MLS that there would be an agreement signed with the seller to pay up to 3%?
I'm confused. If you are going to forgo a payment of a percentage of a fee, which really is paid by the seller to begin with, what is with the complicated mumbo jumbo? Isn't there an easier way to lock the buyer in without scaring them to death?
Am I making sense?
I'm going to take a stab at this one to see if I understand it and if I can explain it.
The agent you have referred a client to is the buyers agent.
She charges 3% as her buyers agent fee.
If the sellers listing agreement states a co-broke of 3%, then the buyer does not pay any fee. The 3% buyers agent fee is paid by the selller.
If the buyers agent finds a home that has a 2% co-broke, then the seller pays the buyers agent 2% and the buyer would be required to pay the balance of 1%.
However, the buyers agent states that if the co-broke is 2.5%, then she will accept that and not charge her buyer the extra 0.5%. She's essentially saying that is close enough to my 3%, so I'm happy.
In the case of a FSBO, and assuming the seller will not pay a co-broke, or even if the seller pays a 1 or 2% co broke, the buyers agent still wants 3%. The buyer will have to make up the difference between the 3% and anything that the FSBO pays.
I like gbone's policy of crediting anything over 3% to the buyer. I plan to adopt that because not only can it be a help to the buyer for closing costs, but it is an incentive to them signing a buyer broker agreement.
Yep that's it. Now. Question.. Why would anyone sign anything that doesn't state that the 2.5% is enough? If, as a buyer's agent, I'm willing to accept what is in the MLS up to 3% but not lower than 2.5%, why am I not putting that in the agreement? That's what I'm wondering. A contract is a contract, as we'll read here time and again, so what would possess me, as a buyer, to sign an agreement not stating what the agent is telling me?
Yep that's it. Now. Question.. Why would anyone sign anything that doesn't state that the 2.5% is enough? If, as a buyer's agent, I'm willing to accept what is in the MLS up to 3% but not lower than 2.5%, why am I not putting that in the agreement? That's what I'm wondering. A contract is a contract, as we'll read here time and again, so what would possess me, as a buyer, to sign an agreement not stating what the agent is telling me?
I agree, it should be in writing.
Bill
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.
