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A contract is a contract. But I guess it depends on how badly you want to sell. I might go an extra 1% for a full price cash offer, but nothing else.
In my state realtors are required by law to present all offers made. I would contact the board of realtors for your area and determine if there is a similar rule there and if it is legal for realtors to attempt to extort money out of sellers in this fashion. I get the feeling they are doing something unethical, if not illegal.
I think it was a bit tacky, but it wasn't unethical or illegal. Besides, we have no idea of the terms of her agreement with the Buyer.
Sales agreements are contracts between Buyers and Sellers, so the contracts stipulating commissions are separate in almost all cases. (Poorly written purchase offers being an exception.) On occasion, mention of a commission may be included in a sales agreement, but that is just to reaffirm that the Seller (usually) has agreed to pay a commission.
On the Sales Contract form often used by Michigan Realtors®, that mention appears as such:
"30. SELLER ALSO AGREES to pay the Listing Broker/REALTOR® named above a commission as stated in the Listing Agreement for the property."
The agreement as to the payment of the Buyer's Agent is usually completely separate from the sales contract.
Actually a buyers agent will normally get half of 3% or 1.5% to the seller, and 1.5% to the office.
What offering only a 4% commission, means she would get 1% commission. The better agents will sell the homes with a full commission, because after expenses which are much larger than the public thinks, 1% commission does not earn enough to spend their time on the listing, when they can sell another home and get a full 1.5%. And a harder to sell property, can be a total of 10% commission or an agent will not bother to work on it. I was an investment broker from 1972 until I finally retired, and I would not work on properties with cut rate commissions, and a lot of them paid a full 10% commission.
I only sold 6 homes for personal residences, in all the years I spent in the business helping friends. Though on the other hand, I sold 14 homes in 2 1/2 hours on the telephone one afternoon. A 13 home to be built subdivision, and one nice middle class home needing an immediate sale to prevent repossession. One buyer took 5 and no one took less than 2. All bought to use as rentals. Thirteen paid me a 3% commission and one a 6% commission.
What a lot of sellers do not understand, is 80% of all homes are sold by only 15% of all agents. Those agents will not work for less than a full commission. They are the ones that get the best prices for property, and move it quickly.
The other 85% of agents, sell only 20% of the homes sold. They are the ones that are so desperate they list property at a cut rate commission. They are the ones that do not know how to negotiate the best prices and terms of sale for the sellers. They are the ones, that have sales fall through and do not close quite often. And remember that 85% of new agents, will fail out of the real estate business, as they do not make enough money to make a living. They never learn how to sell real estate, and get the sales that close.
Keep in mind the agent that demands 3% commission, may bring you the only sales contract, and the best price contract.
When you list at a lower than normal commission, you eliminate the majority of the Realtors working on selling your home, especially the ones that will bring you a nice clean contract that will close. They will figure why bother to work on selling your home, when they can sell another one and get a full commission.
You don't have to do business with the agent that demands 3% to the selling office, and the agents do not have to sell your home.
That is the crux of buyer agency fees.
Commonly, the buyer has to roll them into the contract price to be able to finance them.
Most regulator bodies that I've seen require consumers to be informed of things like total amount payable when you finance a car or a take a loan.
Since buyer's agents look after their clients, is it fair to assume that the buyer's agent explains the impact of financing buyer's agent commission?
For example:
Agent:
"Mr and Mrs Smith, I'm here to look after your interests so I should inform you that, with your $350k budget for a home, my services to you, the buyer, will cost approximately 10k. In our system, this cost is physically paid by the seller but it's bundled into the price of the home. So you pay in the end."
Mr Smith:
"oh great so that means I can finance it in my mortgage, right"
Agent:
"You betcha. However, since I'm here to look after your interests, I should explain to you that if you take a 30 year fixed mortgage at today's low rates, that 10,000 will cost you over 18,000 in the end. And, unfortunately, unlike money you put into the actual home, money attributable to commission does not appreciate as the market appreciates. It's not like a new kitchen or buying a bigger home with the money. It's, kind of, well. Gone. The only thing lasting is your payments on it and you'll be paying over $50 every single month for the next 30 years for my services. And if you change houses before 30 years, you'll accrue more commission fees to continue paying on forever."
Mrs Smith:
"That's ok, your services are worth it to me. I can't be bothered driving myself to viewings."
Is that kind of how it works? Or are buyers just told not to worry because "the seller pays it all".
Haha. But, it still doesn't change the fact that the buyer and agent may not have had an agreement (yet) if there was no written offer yet.
In life, virtually anything is possible. However, based upon the information given, I'd say that it's more likely that the agent has an agreement already in effect with the Buyer.
Should we quiz the kid at McDonalds about how much of the price of our burger is paying his wages?
Do you do this with all purchases JB?
The fact is, our commissions ARE spelled out quite clearly in the closing documents that the buyer sees and signs, and I can't think of another industry where that's true.
They will figure why bother to work on selling your home, when they can sell another one and get a full commission.
Whoa. You're confusing me. Aren't they working for the buyer to help them buy the right home at the right price? Why are you saying that they are working to sell a seller's agent home. Now your starting to sound like the official NAR explanation of MLS which many agents here say is wrong.
In life, virtually anything is possible. However, based upon the information given, I'd say that it's more likely that the agent has an agreement already in effect with the Buyer.
I think so, too.
If the agent is withholding the offer at the instruction of the buyer, it is quite acceptable action.
Tacky and crude as related? Maybe.
But, if the buyer has told the agent to confirm commission prior to forwarding the offer, it is the right course of action.
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