I Love Telling This Story About Real Estate Commissions (negotiating, percent, legal)

[Diana Holbrook]

Originally Posted by johngolf

Tom was retiring from being a partner in a very successful CPA firm in Boston. He knew how to read contracts.

The issue is Susan was so casual about "someone from her office will cover it" that it never occurred to Tom (or anyone for that matter) what could and did happen to the tune of $10,000.00.

Tom's error was in assuming it would be likely Susan would be working both sides. It's actually fairly unusual. It was always more likely Tom would be paying 6% than 4%.


Tom lucked out to even find a buyer at an open house. Open houses are usually good ways for agents to meet buyers who actually end up buying a different house.

An agent other than Susan made the offer. That should have made it clear this was not a Susan-only deal. If it wasn't clear enough right off the bat... That is a mistake on Susan's part.

[El Chingaso]

Originally Posted by johngolf

Tom hired Susan (local, well known agent) as his selling agent for his $500K home. Susan said her commission was 6% but if she was both the listing and selling agent she would charge 4%. They had several open houses and things were moving along. They had an open house scheduled for a Sunday. Susan called Tom and said she could not make it but she could have "someone from her office" cover it. Tom said fine. Low and behold someone no one knew walked in at the open house and made an offer.

When doing the paperwork Tom discovered he was going to be charged 6% commission. He called Sue. She said as no one knew the person who made the offer and the person from her office was claiming she was the procuring agent. Tom believes he was tricked when Susan just said "someone from her office" would cover the open house. Susan never explained anything. Had she, Tom said he would have cancelled the open house. It was a $10K difference. Nothing to sneeze at.

So much bad math.

[nobodysbusiness]

Originally Posted by johngolf

Tom was retiring from being a partner in a very successful CPA firm in Boston. He knew how to read contracts.

The issue is Susan was so casual about "someone from her office will cover it" that it never occurred to Tom (or anyone for that matter) what could and did happen to the tune of $10,000.00.

You have a fundamental misunderstanding of the process.

Even if Susan had hosted the open house, there was no guarantee she would have been the agent of the buyer.

The other thing you are not understanding is that there was a dual agency - it was with the buyer's agent and the listing agent being the same company. That's why I said to "read the contract" to see who the variable commission referred to - whether it was the listing agent, per se, or her company (most likely the company, but I don't know). I that case, it *should* have been a variable commission and if it wasn't, then there is likely a remedy.

Knowing "how to read a contract," and reading a specific contract are two different things. Everything is spelled out in the contract - shouldn't be any mystery.

[Diana Holbrook]

Originally Posted by nobodysbusiness

That's why I said to "read the contract" to see who the variable commission referred to - whether it was the listing agent, per se, or her company (most likely the company, but I don't know). I that case, it *should* have been a variable commission and if it wasn't, then there is likely a remedy.

I don't know the OP's contracts or even what state he's in. But think about the ramifications of this, particularly with a large brokerage with many agents. How is it in a client's best interest (either buyer or seller) for agents to make considerably less if they do transactions with others within their company brokerage?

There would be no benefit. And there is no windfall to those agents in such circumstances. It would be a huge disadvantage to introduce such a financial disincentive to working with company agents. Even if we are on "Hi Bob" friendly terms, it is exactly the same amount of work, exactly the same cost to the agent as any other transaction. There is no logical basis for a discount. Fellow agents at a brokerage are not like co-workers on a project who share information or share workload. We're independent contractors who do not share client data or strategy.


It's possible that's not well understood by some... and this agent perhaps should have explained better when the open house was held, or when offer was received.

[Summer'sBreeze]

Originally Posted by Diana Holbrook

Tom's error was in assuming it would be likely Susan would be working both sides. It's actually fairly unusual. It was always more likely Tom would be paying 6% than 4%.


Tom lucked out to even find a buyer at an open house. Open houses are usually good ways for agents to meet buyers who actually end up buying a different house.

An agent other than Susan made the offer. That should have made it clear this was not a Susan-only deal. If it wasn't clear enough right off the bat... That is a mistake on Susan's part.

Tom's error was trusting Susan, as his listing agent, would warn him about things like this. It may have been legal for Susan to hold back (I don't know) but it was unethical, and I wouldn't be surprised if all of Tom told all his friends and acquaintances to avoid Susan.

[Cabound1]

Originally Posted by possibleyou

There's nothing wrong with this. I don't understand why so many people complain over commissions... seriously get over it if you want your house actually sold. Agents work hard to get your home sold. People are so dirt cheap which I dont understand as the commission just comes directly out of the sale at closing any way. It's not like you have to pay it out of your personal bank account etc. It just comes out of the sale of your home at closing. It's really not that big of a deal.

Sorry, but homes sell themselves in the Bay Area. The realtor is no more than transaction processor. One percent is too much.

[adventuregurl]

Originally Posted by Diana Holbrook

Tom's error was in assuming it would be likely Susan would be working both sides. It's actually fairly unusual. It was always more likely Tom would be paying 6% than 4%.


Tom lucked out to even find a buyer at an open house. Open houses are usually good ways for agents to meet buyers who actually end up buying a different house.

An agent other than Susan made the offer. That should have made it clear this was not a Susan-only deal. If it wasn't clear enough right off the bat... That is a mistake on Susan's part.

Agree with everything here ^^^.

In a market that's slowly moving away from a seller's market he's lucky he sold quickly for full price.

He agreed to the 6% and Susan was not the selling agent...so his agreement stands. BTW this is standard all over the country.

[Chas863]

In my opinion, it would be a big disincentive to offer a lower commission if the listing agent or someone from the same company finds a buyer for my house. If I've got a For Sale sign in my yard from ABC Realty, why would I want it to be advantageous for every realtor in that company to sell some OTHER listing other than mine? Makes no sense at all.

I want MY house sold. If I'm willing to pay X% commission to get my house sold, why should I discourage the agents in the company I list with by offering them less to sell my house than they would make by selling some other company's listing?

[SanyBelle]

I've read the first post a few times and not sure I understand it. This is what I think it says: If Susan sells the house with no other agent (either from her agency or another) bringing in a buyer, she would get 4% but if there was another agent involved, the commission is 6%. Is this correct?

How often is only 1 agent involved in a sale?

[Teacher Terry]

The same thing happened to me but I complained in person to the broker and told her if the money wasn’t returned to me within a week I would complain to the real estate commission and post all over social media. I had a check within days.