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.
You do not have to specify the credit is waived commission because it is irrelevant- any credit will have to go in the offer and CD as a closing cost credit no matter what the reasoning for the credit is.
I disagree with not needing to mention the commission is waived. The MLS is a contract between agents for compensation. If there is nothing in writing that states the commission is waived, there is nothing to protect the seller/listing agent from having to pay it at closing. All terms need to be in writing.
You will need to check with your broker as they will likely want their cut.
Assuming that is a non issue, you could take your commission either way - but yes if it is a closing cost credit it will need to be reflected in the offer as such.
Really though it doesn't make a difference whether it is a credit or a reduction. Its all the same really.
Just waive the commission, adjust your offer down by that amount, ask for whatever concessions you need and your lender allows.
You do not have to specify the credit is waived commission because it is irrelevant- any credit will have to go in the offer and CD as a closing cost credit no matter what the reasoning for the credit is.
It does matter if it is a closing credit vs reduction of price. If its a credit and you are getting a mortgage, nearly every lender caps the amount of credits you are able to receive at closing.
For instance, I did a deal where the listing agent's broker flat out refused to lower price instead of zeroing the commission...she was active in that neighborhood, and did not want to have any lower comps. I was crediting my commission to this particular client. Well, when the inspection was completed, low and behold we needed repairs. Seller refused to do repairs, but offered cash in lieu of repairs....again, broker refused to lower the price - just offered closing credit.
When the mortgage company got their hands on it, they capped the amount of closing credits at 6% if I recall correctly...my client had about 8% credits coming their way, and no way to get the final 2%.
I ended up having to take a commission that I did not intend to take. Yes there are ways for me to give them the final 2% outside of closing but all of those have tax implications, and other messy strings attached.
So YES it does matter, whether its closing credits, or price reduction.
Falconhead - I did not say the commission waiving need not be in writing - Obviously that has to be disclosed - thats a whole other issue and not what the OP was asking.
I said IF TAKING A CREDIT - WHETHER ITS CONSIDERED TO COME FROM PROCEEDS OR COMMISSIONS IS IRRELEVANT. Its a simple closing cost credit, no matter where it came from. The lender doesn't care and "waived commissions" have no special category or treatment.
Maybe that wasnt clear.
Marksmu -That is why I said whatever credits the lender allows. If the lender allows 3% and hers add up to 5 - its not happening.
Again - Since no matter the source -any credit is a closing credit, it must go into the docs AND it has to meet lender guidelines. The fact she has commissions in the deal does not help her closing cost credit situation in any way, and in fact has no bearing on the credits whatsoever.
I am not implying in any way waiving commission does not need to be disclosed - just that it has nothing to do with her CC credits.
Last edited by minna_reid; 09-28-2017 at 11:05 AM..
There's no conflict-of interest at all in an agent negotiating for his own interest in his own purchase! There is no more direct, clean and pure interest than that.
This scenario you paint leaves this agent with essentially no representation. You said it yourself. You would have accepted less or paid for some repairs he didn't ask for. That means you had a buyer who did NOT get the best deal he could have gotten for his client... himself.
I think what the broker was referring to was a conflict of interest similar to if a lawyer or accountant had himself or a colleague in the office buying property from an estate that he was managing. In that case, I would imagine that the prudent thing to do would be to have a couple of independent appraisals and pay the price that they suggest rather than to try to negotiate hard, which could look like they are taking advantage. The transaction itself could potentially raise red flags so you would need to do it by the book. In the case with the broker that i'm referring to, paying my full asking price was similar to what I describe with paying an appraised value - less chance of accusations. If I were to raise a complaint saying that because someone from the office bought my home I got a bad deal, they could point to the fact that the agent just paid my full asking price and didn't try to use any influence or collude in any way to reduce the price. If, however, the agent did negotiate a price reduction (with her colleague advising me), that might land them on shaky ground in a complaint. This was precisely their concern and why the broker insisted on a full price deal.
Anyway, I think you will find that this is a potential conflict and that's why this broker handled it the way they did. Does that make sense?
An agent in the same office wanted the home and the broker required that this is how the transaction would be done. Agent/buyer did not have to agree but if she wanted the home she would have to. Sorry if it was unclear that it was an agent within their office.
The listing broker negotiated a great deal for YOU as YOUR agent. But make no mistake, there was no duty to NOT allow the buyer to negotiate a better deal for herself.
There is a word for what the broker did to his agent in this story, but it's not a nice word. He used his position over her to get you a better deal... whatever you call that.
I guess it doesn't surprise me that any deal you've been a part of got kicked up into a stink, j_b. I think you may have a rare gift! :-)
Anyway, I think you will find that this is a potential conflict and that's why this broker handled it the way they did. Does that make sense?
A bn agent cannot represent a seller if he is the purchaser in SC due to the obvious conflict of interest. How can the agent represent the sellers best interest if he is the buyer?
In this instance it's an interesting because the BIC or agent repping the seller weren't the direct buyer. The buyer/agent could have bought the house "unrepresented" and there is no legal conflict. I don't know that this BIC handled the situation well and if I had been the buyer/agent I'd be unhappy with the BIC.
However, I don't think this is relevant to the OP.
The listing broker negotiated a great deal for YOU as YOUR agent. But make no mistake, there was no duty to NOT allow the buyer to negotiate a better deal for herself.
There is a word for what the broker did to his agent in this story, but it's not a nice word. He used his position over her to get you a better deal... whatever you call that.
I'm inclined to think you may have nailed it here Diana. What better leverage is there to get your seller the highest price and yourself the highest commissions, than to tell your employee not to even bother trying to ask for less.
I appreciate the good chuckle thinking about how that one way conversation probably went in the broker's office.
I buy and sell my own investments and residences every time. Because the agents do have the advantage of knowing the process we are required to disclose that the buyer or seller is an agent. It is disclosed in the MLS and in the contract. I did represent a lawyer once that also did this. There may be no way to really even it out because I do this all the time and most people usually only buy a house every few years or so at most. The fairest thing is just disclosing that the disadvantage may exist. Really if they have their own representation I don't see how its a disadvantage.
In Idaho dual agency is allowed even with selling your own property. I did sell an investment of my own this way years ago. Know the people still and they are very happy with the whole deal, just as we were to sell it to them how we did. Don't cheat anyone, always disclose what you should and things will be fine.
How I do it is, when I buy I just have the commission amount credited to the purchase price. When selling, I don't pay myself a commission and just have the transaction fee that I owe my broker and the buyers agent commission paid from the proceeds. We have commission split letters that we fill out with this, the broker signs, then they are then sent on to the title company.
I'm inclined to think you may have nailed it here Diana. What better leverage is there to get your seller the highest price and yourself the highest commissions, than to tell your employee not to even bother trying to ask for less.
I appreciate the good chuckle thinking about how that one way conversation probably went in the broker's office.
As an important technical distinction, agents in an office are not "employees" they are independent contractors. But there are certainly real and perceived differences in power and authority between them, particularly if the agent involved was a relatively new agent. Yeah - your DB says "I won't let you offer less than full price on this and don't bother asking for any repairs", many new agents aren't going to stand up to him. Maybe it makes him a good negotiator for his client, but I'm not sure I'd count on him to be a good mentor and advisor to me, as an agent in his office.
Last edited by Diana Holbrook; 09-28-2017 at 12:34 PM..
Reason: added quote for context. :)
Looking to purchase my own home after i get my license. I like to be proactive so I would like to know the process and what my options are for my commission. From my understanding I can either ask for a reduction in price by the commission amount or ask for a credit towards closing. If the commission amount is credited to closing would this be considered as an assist and will this need to be included in my offer price to reflect the amount credited?
To help us answer your questions in the fullest, could you please clarify as to what your concerns and desires are?
For instance: Are your desires to receive the commission as a price reduction or a closing credit, rather than to just receive the commission as a paycheck, as normal buying agents would do?
If so, than I'm assuming this is for tax purposes in order to avoid paying them regarding the income you would gain in a normal transaction.
If it were me, (and I'm not an agent) even if I didn't receive the commission as regular income, I would still want clarification that having the funds "credited" to the closing wouldn't be considered as income.
IOW, I would have concerns that the money "credited" to my closing fees, may still be considered as income by the IRS.
Perhaps you might ask them, or consult with an accountant who handles real estate agents' tax returns.
You might also ask a broker or agent in here who buys and sells their own properties, What exactly is the best route in order to avoid paying income tax on the commission- If that is indeed why you are not interested in not taking the paycheck at close.
EDIT: Or better yet, ask them, What are the pros and cons of accepting commission fees as credit at closing?
And, What are the pros and cons of having your commissions reflected in a price reduction?
Then, which of the two is the better route, and why?
Last edited by riggy_house; 09-28-2017 at 01:00 PM..
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.
