Sellers Broker (Boston, Brookline, Arlington: real estate, condo, attorney) - Massachusetts (MA) - City-Data Forum

masshousehunter · 03-19-2015, 12:13 PM

We are looking to buy a 3BR condo in Brookline or a 3/4BR single family house in Arlington. We're aware that the housing market is extremely competitive right now.

One question I had was the structure of the commission the seller's broker generally has with a seller. My understanding is that commission in the area is typically 5% split between the seller's broker and buyer's broker. Does the seller typically pay the seller's broker 5% regardless of whether or not there is a buyer's broker involved -- or do they have a clause that reduces their fee to, say 3%, if the commission is not split with another broker?

If his commission is not typically reduced, we could of course ask him to agree to do so since there is no buyer broker to share the commission with, but I'm not sure how he would take it -- considering his commission is technically based on an agreement with the seller. For any seller's brokers out there would this bother/insult you? Or would you consider it no big deal as it would net you the same as if we walked in the door with a buyer's broker?

Our alternative is:

My In-law is a real estate attorney. We have the option of using her as our buyers broker, and she has agreed to kick us back 90% of the commission she receives. Of course we would use her as our real estate attorney, and pay her typical rate there. This sounds great, of course -- but, there is more paperwork, and working with family can always get messy.

Parsec · 03-19-2015, 12:47 PM

That's an agreement between the seller and the his agent, so it would vary from listing to listing. When I sold my house I had a clause in my contract that reduced the fee from 5% to 4% if my agent's firm represented both me and the buyer. Whatever the agreement is, why would you the buyer see any discount? The seller is the one engaging the broker - you have nothing to do with it. The money will partially go to the seller through a reduced fee and the portion of the fee above 2.5% will go to the seller's broker.

If you're looking for a kickback you can always use a discount broker who will rebate part of his fee back to you. Or as you said, use your in-law as your buyer's agent and receive an even higher kickback.

masshousehunter · 03-19-2015, 01:19 PM

Let's compare the 2 examples:

Standard: Seller + Buyer Broker.
Offer: $900K
Seller's Broker gets : $22.5K
Buyers Broker gets $22.5K
Seller receives: $855K
Buyer Pays $900K.

Seller's agent is willing to take at $25k without buyers broker involvement.
Offer: $890K
Seller's Broker gets $25K (still receives greater than $22.5K)
Seller receives $865K (receives more than $855K in standard example)
Buyer Pays $890K (saves $10K vs standard).

It's a WIN-WIN-WIN. If the Seller's broker, Seller, buyer are willing to deal.

CaseyB · 03-19-2015, 01:54 PM

It's not a "Boston" topic.

masshousehunter · 03-19-2015, 02:07 PM

Parsec · 03-19-2015, 02:47 PM

Casey: Can you move this to the real estate forum please?

masshousehunter: But why would the seller's broker take $25k when they can get $35k and the seller still receives $865k? Or the seller's broker can get $30k and the seller will get $870k. What I'm saying is, the seller's broker is getting paid by the seller. Why would they let the buyer in on any of the profit when they can share a bigger piece of the pie between themselves? If you won't pay the $900k then they will find another buyer who will. Especially in Brookline/Arlington.

CaseyB · 03-19-2015, 04:00 PM

Quote:

Originally Posted by Parsec

Casey: Can you move this to the real estate forum please?

If you won't pay the $900k then they will find another buyer who will. Especially in Brookline/Arlington.

I'm not sure it should be moved (yet) this is still very local.

Good point about finding another buyer who won't hassle them about the commission.

masshousehunter · 03-19-2015, 05:12 PM

Quote:

Originally Posted by Parsec

Casey: Can you move this to the real estate forum please?

masshousehunter: But why would the seller's broker take $25k when they can get $35k and the seller still receives $865k? Or the seller's broker can get $30k and the seller will get $870k. What I'm saying is, the seller's broker is getting paid by the seller. Why would they let the buyer in on any of the profit when they can share a bigger piece of the pie between themselves? If you won't pay the $900k then they will find another buyer who will. Especially in Brookline/Arlington.

So my understanding is that 95% of buyers come in with a buyers broker. So 95% of the time the seller's broker will not be able to get more than the 2.5%. The reason I posted this here is I was hoping for seller's brokers to tell me they would entertain such deals or no way they wouldn't' do it. Yes it's a bit of a hassle for the seller's broker -- but both the broker and seller would do better.

If the seller's broker is not interested, I'd simply get representation (via my in law). I'd offer $900K (assuming full ask gets it done -- i know sometimes it might not). The seller would net $855K the Sellers's Broker would receive $22.5K, My broker would get $22.5K and I'd get $20K back. Part of the reason my in-law (in addition to being family -- the biggest reason) is willing to do this is I'm not looking for her to show us around at all -- my intention is to only bring her in to make the final deal.

masshousehunter · 03-19-2015, 05:19 PM

If we moved this to the real estate thread do you think more brokers would chime in with their thoughts?

Nevermind, I see that the real estate thread is not localized. I'm looking for responses from Mass RE brokers in particular. thanks.

CaseyB · 03-19-2015, 05:43 PM

We have a local broker who is a forum member (MikePRU). I'm sure he'd be happy to chime in when he sees this thread.