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Assume the listing agent's commission is 5%. Then assume the agreed sale price of my house is $200,000.
After the inspection, the buyers request items to be repaired/replaced. Seller counters with cash back to the buyers in the amount of $2,000 to which the buyers agree.
Is the 5% commission to the listing and buyers agent now based on $198,000 and not $200,000? Tis would seem fair as the price of the house has been reduced by $2,000.
How does this work? Is there an added clause on the listing agreement?
Typically, even with a cash back scenario, the commission is based on the sales price in the contract. In other words it's based on $200,000. The difference in this situation is only $100. If I was a seller, I'd be happy to have a contract and not quibble about $100.
If a seller wanted to reduce the commission in a cash back situation, that situation would need to be addressed in the original listing agreement.
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Most MLS's, and REALTOR® Ethics, will not allow a listing agent to reduce the buyers' agent's commission below gross sales price percentage or other offered fee due to contract negotiations. Bear in mind that the price delivered still has to be an appraised value.
Otherwise, the parties specific agreements with their respective agents are their business.
So, if the split to the agent is 2.5% of the $2000 CC agreement, that is $50 in commission to the agent.
If 50 smackers breaks the deal, talk to your agent. Tell them you don't care about some tacky "closing gift" tchotchke, but would rather have the moola.
But, would the seller be farther ahead to stand firm on lunch money, or to make the repairs out of pocket, risk a cost overrun, or poorly done work, and lose the deal?
Doing the repairs and assuming those risks is one sure way to save the $50....
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