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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?
Yes, you could structure the offer that way. But first you need to check with your managing broker to make sure your office isn't going to want a part of any commission due to the office. Most managing brokers/companies will allow a certain number of "free" transactions for agents' own purchases/sales.
I had an agent purchase a home that I was selling and the broker was careful not to create any perceptions that the buyer's position created an unfair advantage over other buyers or that they were abusing their power when dealing with me. So the broker required of the buyer/agent:
-full price offer
-no haggling on any repairs resulting from the survey
-no negotiation over anything - just accept the terms that I wanted (I was not unreasonable).
In the end, I felt that being an agent made things more costly for the buyer as I would have been open to negotiations on price and repair costs. I don't know how normal this is but it's what I experienced. I have no idea how the commission worked.
I had an agent purchase a home that I was selling and the broker was careful not to create any perceptions that the buyer's position created an unfair advantage over other buyers or that they were abusing their power when dealing with me. So the broker required of the buyer/agent:
-full price offer
-no haggling on any repairs resulting from the survey
-no negotiation over anything - just accept the terms that I wanted (I was not unreasonable).
What? Was the Broker working for you? That's ridiculous for ANYONE to agree to, let alone an agent purchasing his own home.
That is not normal at all. A good agent who knows how to negotiate will be negotiating on their own purchase.
As the seller paying the commission, I was happy that the broker discussed this very transparently with me, and pointed out the potential for conflicts of interest and what they were going to do to minimize them. They also wanted to make sure that I was comfortable with the whole thing and offered to make the buying agent step out at any point if I became uncomfortable (like if other offers came in, etc). I thought that this was a very grown up way of dealing with a situation that could create complaints or perceptions that they were trying to avoid.
As the seller paying the commission, I was happy that the broker discussed this very transparently with me, and pointed out the potential for conflicts of interest and what they were going to do to minimize them. They also wanted to make sure that I was comfortable with the whole thing and offered to make the buying agent step out at any point if I became uncomfortable (like if other offers came in, etc). I thought that this was a very grown up way of dealing with a situation that could create complaints or perceptions that they were trying to avoid.
It's a shame to hear that it's unusual.
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.
What? Was the Broker working for you? That's ridiculous for ANYONE to agree to, let alone an agent purchasing his own home.
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.
It was explained to me that the cleanest way to do it would be the best for their compliance. They wanted to minimize the chance of complaints from other buyers or from me. For example, complaints from me that I was advised/"persuaded" to take a lower offer from their colleague (hence why they said 'full price' only), other buyers charging that the agent had an unfair advantage, etc.
But...even with all of this...
In fact, another buyer did kick up a stink (threatening a formal complaint and a lawsuit) when they found out that they lost the house to an agent in the listing agent's office. Their offer was lower and I rejected it but they charged that I was unfairly advised to reject it and that the agent had an advantage. No matter how tenuous the complaint may have been, the broker became extremely nervous with all of this and all hell broke loose. The other buyer found another house and it died down but was not pretty and the broker nearly unraveled the whole thing to avoid a problem. I felt that the broker handled it very well from the beginning when they set the 'rules' through to the resolution when a conflict did arise.
Sorry, I don't mean to hijack this thread but wanted to answer the questions posed.
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.
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