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I had an agent approach me about one of our properties.
Quote:
Originally Posted by arjay57
I think his theory was that the commission would be paid by the seller (thereby reducing the price).
So, is this a property that you own and are selling FSBO...or are you an agent and "one of our properties" refers to one of the properties that you have listed for sale?
If you're selling FSBO, it makes no sense for the agent to seek a commission. He just needs to focus on getting a lower price. Normally, an agent who is buying a property would use any commission to offset the sales price--so that the commission amount is not taxable. Either way, commission or no commission, the net effect is the same. You both need to be focused upon the net price.
If it's listed for sale, it's perfectly normal for an agent to receive a commission for representing himself. If the agent is not a broker, however, it's a bit more complicated since the commission may need to go through the agent's broker and the broker may want a piece of the action.
Last edited by jackmichigan; 08-10-2017 at 08:37 PM..
This is correct. It could also help him lower the value for his property taxes.
In my experience, when a commission is applied against the sales price the sales price remains the same but the amount is credited against the amount needed for closing. Therefore, at least in all the transactions I've handled, it doesn't help in actually reducing the reported sales price so it doesn't really help with property taxes. That's another reason why, if it's a FSBO, the agent should forget about a commission and just focus upon getting a lower price--which may have more likelihood of reducing the assessment level for property taxes.
I'm not sure why he would want a commission if he's buying it for himself -- it's better to get a good price on the property and not have to pay income taxes on the commission.
It would also lower the property taxes a bit if you drop the actual sale price. Personally if I had a buyer in front of me ready to go finances in hand I would negotiate his commission. Instead of typical 3% i would offer 1.5%. Or offer to pay closing costs if it's the same basic amount. This way he still gets something and you keep a little more in your pocket too.
People get too fixated on what agents get or should get, or how hard they work. Personally I don't see why it makes such difference. You still sold the place and got the money you wanted. Nobody works for free. Sure there are some horrible agents out there. Dint hirecthose types.
I had an agent approach me about one of our properties. I asked if he had a buyer or was just looking around and he replied that he was actually buying for himself. He wanted to know if his commission would be covered<>In any event, is there a standard procedure in this situation?
Tell him you are not the sucker he seeks. And walk away. This is not his only trick.
So, is this a property that you own and are selling FSBO...or are you an agent and "one of our properties" refers to one of the properties that you have listed for sale?
If you're selling FSBO, it makes no sense for the agent to seek a commission. He just needs to focus on getting a lower price. Normally, an agent who is buying a property would use any commission to offset the sales price--so that the commission amount is not taxable. Either way, commission or no commission, the net effect is the same. You both need to be focused upon the net price.
If it's listed for sale, it's perfectly normal for an agent to receive a commission for representing himself. If the agent is not a broker, however, it's a bit more complicated since the commission may need to go through the agent's broker and the broker may want a piece of the action.
Yes, it's a property I own and am selling myself.
If the buyer can figure out a way to reduce his taxes that's fine with me.
However, I'm not sure how that would work here.
If he wants me to reduce the price, why not just make an offer for whatever he's willing to pay? Unless he decides to pay himself a commission, there's no income to report.
If the buyer can figure out a way to reduce his taxes that's fine with me.
However, I'm not sure how that would work here.
If he wants me to reduce the price, why not just make an offer for whatever he's willing to pay? Unless he decides to pay himself a commission, there's no income to report.
Then it makes no sense for him to seek a commission. There is no benefit to him to do so. You two just need to decide upon an acceptable price.
Most likely, he just feels that he can get the priced reduced if you agree to pay a commission...but if you're willing to reduce your net in that fashion then I assume that you would just as easily simply reduce the price. For both of you, it's all about the net price. (It's actually better for him just to purchase based upon a lower price, without messing around with a commission in the calculations.)
Last edited by jackmichigan; 08-11-2017 at 01:25 PM..
Reason: typo
When my brother who has his Broker's license bought a ranch the Listing agent INSISTED on a commission split... my brother with 30 years in the business has never received $1 in commission... he is an institutional Real Estate Portfolio manager with about a Billion in assets managed.
To make a long story short... he said if the Seller and listing broker insisted on a commission split to take it off the price and everyone was happy... it was enough to buy a nice new Kubota Tractor he was planning on anyway...
They offered a 1.5% split to him...
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