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Old 11-12-2008, 11:35 PM
 
1,151 posts, read 2,668,547 times
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Quote:
Originally Posted by Brandon Hoffman View Post
Agents, do the sellers not agree to a certain commission on the ERTS and splits advertised on MLS? If it is done that way, it is very different from SC.

I can certainly understand with an unrepresented seller, but that seems like something best left out of a offer to purchase when it's advertised on MLS.
Are you suggesting that a buyer should sign an agency contract obligating themselves to pay their agent's commission if the agent can't collect from the seller's agent, and then make an offer without knowing whether the seller is contractually obligated (to the buyer) to pay the buyer's agent's commission? That would be plain stupid.

Generally I agree that the commission amounts should not be in the purchase agreement, but not because of any MLS rules. Because of legal risk issues. It is a bad idea to have third party beneficiaries to an agreement between the buyer and seller. Apparently the TREC attorneys who drafted the forms slept through that class in law school (or perhaps they are influenced by the brokerage industry to put something in the contract that benefits the agents more than the buyer or seller, which is probably the case). I wonder how many Texas agents ever advise their clients against filling in the commission box, since that really is not in their client's best interest.

Last edited by Austin-Willy; 11-12-2008 at 11:44 PM..
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Old 11-13-2008, 08:08 PM
 
Location: Columbia, SC
9,059 posts, read 18,014,651 times
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Quote:
Originally Posted by Austin-Willy View Post
Are you suggesting that a buyer should sign an agency contract obligating themselves to pay their agent's commission if the agent can't collect from the seller's agent, and then make an offer without knowing whether the seller is contractually obligated (to the buyer) to pay the buyer's agent's commission? That would be plain stupid.
Your post here is irrelevant because commission is predetermined. The listing agent lists at X commission. The listing company then offers Y compensation to the agent that represents the buyer. Y is advertised on the MLS to other agents so they already know what commission is offered on the property.

I wouldn't like that for the reason you stated in your 2nd paragraph. However, if there is an agency agreement guaranteeing the buyer agent X representation then I it would be in the buyers best interest to negotiate that the seller pay it unless they elect to pay the buyer agent commission themselves.
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Old 11-13-2008, 08:27 PM
 
Location: Martinsville, NJ
6,162 posts, read 11,211,790 times
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Quote:
Originally Posted by bentlebee View Post
With most closing be for short sales or bank owned properties...I guess this whole discussion is from the past. No bank is paying 6 or 7 % commission and other properties hardly get sold.....
Here in central NJ, that statement is about as accurate as saying that There's hardly ever traffic on the highway into NYC. I guess it could be true in your part of the world. Please remember that old saw about real estate all being local.
Real people are selling real houses here. They may be selling for less than last year, and they are taking longer to sell, but they are being sold. And while I don't have time to get statistics for you, the OVERWHELMING majority are being sold by the owners, who are also the residents, who are not in foreclosure, and who are NOT short selling.
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Old 11-13-2008, 11:50 PM
 
1,151 posts, read 2,668,547 times
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Quote:
Originally Posted by Brandon Hoffman View Post
Your post here is irrelevant because commission is predetermined. The listing agent lists at X commission. The listing company then offers Y compensation to the agent that represents the buyer. Y is advertised on the MLS to other agents so they already know what commission is offered on the property.

I wouldn't like that for the reason you stated in your 2nd paragraph. However, if there is an agency agreement guaranteeing the buyer agent X representation then I it would be in the buyers best interest to negotiate that the seller pay it unless they elect to pay the buyer agent commission themselves.
How can my post be irrelevant if commissions are negotiable? Plus, you seem to not understand the difference between MLS rules, which bind neither the buyer nor the seller to each other, and contractual obligations between the buyer and seller.
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Old 11-14-2008, 07:05 AM
 
Location: Championsgate, Fl
986 posts, read 3,197,496 times
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Commissions arnt really as negotiable as you seem to be making them out to be. A buyers agent may be prepared to rebate if they are in a state which allows for this to their buyers, but if i am sitting down with my sellers for a listing contract, i discuss what my percentage is and what i would offer out, and we sign up the docs for that. That negotiation is now over. What a buyers agent does with his side of the split is upto him. If a buyers agent came to me asking for me to reduce my commission i can quite rightly unless this is a property which is extremely difficult to sell (which is unlikely to happen because that would really be down to price, and if my sellers arnt realistic in their selling price i would never take the listing) then i might consider a reduction. The reality of the situation is i am paying all the marketing bills, so the notion i am making a fortune on a listing is nonsense. I dont work so that i can give what income i recieve away so working for nothing. It doesnt work that way im afraid. A good realtor does alot of marketing on a property. The notion that you can go to a seller and tell him to reduce the commission and reflect it in the price isnt the reality because the commission structure is a seperate negotiation between the seller and THEIR listing agent and has nothing to do with the buyer. If the buyer were paying the commission at closing directly from their pocket then fair enough but that isnt the case. Sellers are fully aware of how much they are selling their property for and taking into consideration the commission they are paying and know in this market they need to be competetive. It sounds to me like you want all the benefits of using a realtor, without actually expecting us to get paid for our services.

(This info may or may not be specific to Florida)
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Old 11-14-2008, 11:26 AM
 
Location: Columbia, SC
9,059 posts, read 18,014,651 times
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Quote:
Originally Posted by Austin-Willy View Post
How can my post be irrelevant if commissions are negotiable? Plus, you seem to not understand the difference between MLS rules, which bind neither the buyer nor the seller to each other, and contractual obligations between the buyer and seller.
I know you like to stir it a lot and you are asking a different commission about negotiable commissions than we were discussing but I'll answer you anyway. Commissions are negotiable but they are normally negotiated up front between the seller and sellers agent. The sellers agent then offers the split to the buyers agent which is advertised on the MLS. I saw a post of yours in another forum and it seems your agents/MLS operate the same way even if it is included on the contract to purchase.

Since you are twisting words now I'll do it too. Do you, Mr. Attorney, feel that the banks on short sales have a right to interfere with commissions negotiated in a contract between a seller and a sellers agent?
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Old 11-14-2008, 02:31 PM
 
1,151 posts, read 2,668,547 times
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Quote:
Originally Posted by Brandon Hoffman View Post
I know you like to stir it a lot and you are asking a different commission about negotiable commissions than we were discussing but I'll answer you anyway. Commissions are negotiable but they are normally negotiated up front between the seller and sellers agent. The sellers agent then offers the split to the buyers agent which is advertised on the MLS. I saw a post of yours in another forum and it seems your agents/MLS operate the same way even if it is included on the contract to purchase.
Despite what you think, I'm having an honest conversation. But you missed my point about negotiable commission arrangements. When agents say "commissions are negotiable," they mean that commission structures are not set by the industry, but rather decided upon individually from broker to broker. That's why I was confused when you characterized the commission offered by the seller to a buyer's agent as "predetermined."

How can it be predetermined if commissions are negotiable? If agents and sellers are free to negotiate any commission structures they would like, why can't a listing agreement simply say that the seller will pay the listing agent a 2.5% commission, period? Then the seller can negotiate with the buyer to pay or not to pay the buyer's agent's commission. I'm not suggesting that would be the smartest thing for a seller to do, but if commission structures are really negotiable, then the negotiation between the buyer and the seller is not irrelevant.

But even more than that, I think you are missing the legal distinction between what the MLS says and what the buyer can enforce. I'll walk you through it.

The buyer has a contractual obligation to their agent to pay them a commission if the agent can't collect from the listing agent (let's assume, based on the BA agreement). If the buyer doesn't pay it, their agent can sue them for breach of contract.

Let's assume that the MLS advertises that the listing agent will split the commission with the buyer's agent, and therefore, as you suggest is the best idea, the buyer doesn't put anything in their offer about commissions. After all the MLS says a split is being offered.

Cut to closing, and for whatever reason the listing agent refuses to pay the split. Sure, the buyer's agent may have some rights against the listing agent under the MLS rules or other industry regulations. But the buyer has no contractual right to force the seller to pay the buyer's agent commission. The buyer is at risk. That risk could be addressed by simply putting in the contract "Seller pays X% to buyer's agent at closing."

One big difference between agents and attorneys is that agents often base their advice on how transactions are normally done and whether things work most of the time. Whereas attorneys are trained to understand the legal ramifications of the parties' contractual obligations and identify where there are unecessary risks. If things happened the way they were "supposed to" all the time, people would need neither agents nor attorneys. That's not to say that practicality is not considered -- you can't go to extremes to correct every risk. But you can't even make a decision about it if you don't understand the risk.

Quote:
Originally Posted by Brandon Hoffman View Post
Since you are twisting words now I'll do it too. Do you, Mr. Attorney, feel that the banks on short sales have a right to interfere with commissions negotiated in a contract between a seller and a sellers agent?
I don't mind answering this. If a bank's consent is required in order to permit a seller to conduct a short sale, then the bank can withhold their consent for whatever reason they want unless there is something in the loan documents or the law that requires them to do otherwise. I don't specialize in this area, so I don't know if there are laws that address it.

But to answer your question directly, a bank would not, from a legal standpoint, be interfering with your contract. They would simply be exercising their right to withhold consent unless they are satisfied with the terms of the sale. They would not be permitted to encourage the seller to sell the property and pay you less than you are entitled to under your contract (i.e. breach the contract), but they could prohibit the seller from selling unless a lower commission amount was agreed to (i.e. renegotiate the contract).
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Old 11-14-2008, 06:42 PM
 
Location: Championsgate, Fl
986 posts, read 3,197,496 times
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Commission is not set by the industry, it is determined by mutual agreement by the seller and the listing agent. As far as they are concerned they are paying the listing agent the total amount for example 6%. It is then the listing agent who pays the buyers agent their commission. Listing agents could theoretically take in 6% and tell the sellers they will keep 4% for themselves and give 2% to the buyers agent. This is disclosed. The buyer has no input on commission. This is the whole point. It is upto the buyers agent to rebate their customer their commission or part thereof if they want to and are able to. Commissions are not set as an industry standard and are flexible from brokerage to brokerage in terms of between the seller and the listing agent, but as a listing agent, why would i rebate to the buyer when i have incurred marketing costs. Its just ridiculous.
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Old 11-15-2008, 05:19 AM
 
1,151 posts, read 2,668,547 times
Reputation: 248
Quote:
Originally Posted by cfIfan View Post
Commission is not set by the industry, it is determined by mutual agreement by the seller and the listing agent. As far as they are concerned they are paying the listing agent the total amount for example 6%. It is then the listing agent who pays the buyers agent their commission. Listing agents could theoretically take in 6% and tell the sellers they will keep 4% for themselves and give 2% to the buyers agent. This is disclosed. The buyer has no input on commission. This is the whole point. It is upto the buyers agent to rebate their customer their commission or part thereof if they want to and are able to. Commissions are not set as an industry standard and are flexible from brokerage to brokerage in terms of between the seller and the listing agent, but as a listing agent, why would i rebate to the buyer when i have incurred marketing costs. Its just ridiculous.
I'm confused. You say that it is industry practice that the seller pays the listing agent a full commission and the listing agent then offers whatever they want to the buyer's agent. But then you say commissions are negotiable. Those are contradictory statements. Either there is no standard arrangement or there is.

I'm also confused by your last point about rebating the buyer's split to the buyer. You say it's ridiculous because the listing agent has incurred marketing expenses, but that is true whether or not a buyer's agent is involved. So that can't be justification for refusing to part with the commission split / rebate.
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Old 11-15-2008, 03:17 PM
 
Location: Championsgate, Fl
986 posts, read 3,197,496 times
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the commission is negotiated with the seller. There is no fixed amount but once the listing is drawn up this is then set. Why as the listing agent would I rebate the buyer when I have costs incurred to market the property. Unless I bring the buyer and represent them aswell why would I do this. As the listing agent I work for the seller not the buyer. If the buyers agent wants to rebate part of their commission fine but as the listing agent I have alot more expense than the buyers agent. You seem to think we should all work for free. I don't know how much clearer you want me to be. I think you said you were an attorney. I'm surprised you don't understand or army able to grasp the situation. I forget you charge upfront fees so don't deal in risk
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