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Old 07-26-2012, 11:00 PM
 
Location: Rural Central Texas
3,581 posts, read 9,000,834 times
Reputation: 5402

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In my experience in Texas, the MLS agreement is between MLS member brokers. The essense of the agreement relevant to this discussion is that the brokers agree to provide 3% of the sales price as commission to the selling agent. (Selling agent is the agent who brings the buyer, Listing agent is the agent providing the property) If the listing agent lists the property for 4%, then they only keep 1% of the sales and the selling agent gets 3% as agreed.

A buyers agent is one that has a contract with the prospective buyer to receive monies for the successful purchase of a property. Since the client-agent contract is between the buyer and the agent, the buyer pays the fees according to the buyers contract.

The Listing side of client-agent agreement is between the seller and their agent and the seller pays that commission according to the terms of the listing agreement.

In the absence of a contract between the buyer and the buyer's agent, the buyer's agent is still acting as a fiduciary agent for the seller and the commissions come from the seller. Since the purchase contract is between the seller and buyer, not the "buyer's agent", the agent bringing the offer has no standing in the contract or the offer. They would need to negotiate a separate commission agreement with the seller prior to presenting the offer. By including it in the offer itself, it would become a demand from the buyer and subject to the acceptance of the seller as part of the total offer.

The language of the contract would dictate who pays the commission. If the language is simply was in the style of "Agent X shall recieve 6.42% commission", then the buyer must pay that on top of the purchase price at closing. If the style was instead "Seller shall pay Agent X 6.42% commission", then the seller must pay the commission out of the sales proceeds. In the later scenario, the first 3% would come from the portion of the commission contracted in the listing agreement, the remaining 3.42% would be an additional burden on the seller's proceeds.

Since it was included in the purchase offer, the buyer agreed to the terms as a condition of the sale. The agent could not hold up the offer. If the buyer wanted to make an offer and the agent refused to write the offer without the terms, the buyer could have had anyone else write it up since the agent had refused to act upon their wishes in respect to the offer. The agent's alternative would have been to try to delay things and get their own commission contract in place, or file a grievance with the selling broker. As long as the agent was demanding terms in the offer the buyer did not agree with, the agent was in effect quitting and would very likely forfeit any "earned" commission through the act of the showing.

It is good that everyone was able to get around this and close the deal amicably, but while not ambushing or sandbagging the deal, the buyers agent did not go by the book to get the monies.
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Old 07-27-2012, 05:16 AM
 
Location: Florida
18,290 posts, read 18,527,133 times
Reputation: 20965
Since paying the buyers brokers is the buyers problem what would have been your attitude if the buyer had simply offered 1.5% less without telling you why?
If they wanted an extra $500 to buy a new couch, you may feel like you were buying them a couch....a silly proposal.
But if they simply factored that in you wouldn't know or care.
The bottom line is the bottom line and all that's important.
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Old 07-27-2012, 08:32 AM
 
265 posts, read 340,050 times
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Quote:
Originally Posted by old_cold View Post
Since paying the buyers brokers is the buyers problem what would have been your attitude if the buyer had simply offered 1.5% less without telling you why?
If they wanted an extra $500 to buy a new couch, you may feel like you were buying them a couch....a silly proposal.
But if they simply factored that in you wouldn't know or care.
The bottom line is the bottom line and all that's important.
I agree. But had this been done in what I would consider to be a more traditional, accepted manner, .i.e, the buyers includes his agent's commission in his offer by reducing his offer by an equal amount, I would be negotiating/countering solely with the buyer. As it was, I did not really know with whom I was negotiating, the buyer or his agent. I was happy with the buyer price offer of $42k w/$850 closing costs. I was not happy with the stipulation to pay the selling agent $2700 commission; essentially reducing my bottom line by $1440. In the end, I only paid her an additional $630. So, my bottom line was not effected that greatly. I totally realize that.

I posed this question to find out if the is an acceptable practice or whether it is against the MLS rules. I did find some documentation saying it was against the MLS rules in California. I realize the rules vary by state. So, I thought I'd just ask the question here. I don't expect to complain and get money back. If based on the info I get here, I may decide to write the broker and/or real estate commission so she may think twice about having her buyer structure a deal this way in the future.
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Old 07-27-2012, 10:56 AM
 
Location: Salem, OR
13,740 posts, read 31,550,338 times
Reputation: 12105
Quote:
Originally Posted by NativeJr View Post
I agree. But had this been done in what I would consider to be a more traditional, accepted manner, .i.e, the buyers includes his agent's commission in his offer by reducing his offer by an equal amount, I would be negotiating/countering solely with the buyer. As it was, I did not really know with whom I was negotiating, the buyer or his agent. I was happy with the buyer price offer of $42k w/$850 closing costs. I was not happy with the stipulation to pay the selling agent $2700 commission; essentially reducing my bottom line by $1440. In the end, I only paid her an additional $630. So, my bottom line was not effected that greatly. I totally realize that.

I posed this question to find out if the is an acceptable practice or whether it is against the MLS rules. I did find some documentation saying it was against the MLS rules in California. I realize the rules vary by state. So, I thought I'd just ask the question here. I don't expect to complain and get money back. If based on the info I get here, I may decide to write the broker and/or real estate commission so she may think twice about having her buyer structure a deal this way in the future.
Her broker has to sign off on her paperwork so clearly they were aware of how the contract as written. Her broker may have a policy dictating that the minimum brokerage fee is $2700. Who knows? The cleanest way would have been for the buyer to make a lower cash offer and just pay the real estate agents fee themselves, but you do realize that by doing it this way, they just raised the comps for the neighborhood, right? So instead of all those $33 and $31k comps, now, other sellers and appraisers have a $42k comp to work with.

You can file a complaint with the real estate commission but depending on state laws, I highly doubt it is a violation so the complaint won't go anywhere. Real estate brokerages are allowed to set their own fees. There is no law that says that agents have to accept the MLS offering as their own means of compensation. I mean in my MLS right now, there are offerings of $100. Only a crazy agent would accept that as compensation.

I doubt your complaint will deter the agent from asking for a higher fee on a low priced home. I know some agents in Florida, where their minimum is $3,000. Too many $50,000 short sales and foreclosures and you can't run a business on $1500 compensations. While this is clearly an issue of principle for you, as you were okay with the net, I really doubt your complaints to the broker/real estate commission will go anywhere. I'm not sure if that will be more frustrating for you or not.
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