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- lynrosect
- Contributions:129
I was later informed by a Zillow forum posting that the commission is linked to the Seller's listing contract not to the actual sale of the property. In other words, the Listing Agent will collect the entire 6% from the Seller, then give the MLS Listed commission to the Buyer Agent.
- lynrosect
- Contributions:129
All of my offers were contingent upon a few clauses, most importantly, they were contingent upon: The Buyer Agent and/or Broker commission percentage of sale is transferred to the Seller. This term effectively negotiates with the Seller's Listing Broker. If they agree to the term, the 2.5 to 3% Buyer Agent commission is paid back to the Seller at closing.
I recently had an offer accepted with the above term. It can be done. This forum has helped me through the process, so I decided to give back with this post.
I hope this helps! :)
- sunnyview
- Contributions:25127
Congratulations! Glad to hear that it worked out. Thanks for the post :)
- lynrosect
- Contributions:129
Your welcome. I hope this posts helps other buyers.
Good thinking. I like your approach! Congratulations and I hope you enjoy your new home.
- Regina Brassil, "SRQBuyerAgent"
- Contributions:6
Hi Lyn - your approach assumes one important thing - that the listing agent has disclosed everything you need to know, has truly represented the value of the home.
Buyer agents do not simply open up doors for people. We do in-depth research into properties, and represent you to make sure that all of YOUR interests are being protected. Remember, a listing agent represents the seller, and is motivated to get the best price for the seller.
Saving 3 % on the deal sounds great, but often a buyer agent's knowledge will allow you to pay far less for the home. For instance, our buyer brokerage is averaging over 20% off list price for our clients, while the Sarasota average is 10%.
I do worry about issues that may snag you, so would recommend at this point that you do retain the services of a lawyer to make sure that you are protected and nothing has been overlooked.
I wish you the very best of luck in your new home.
Buyer agents do not simply open up doors for people. We do in-depth research into properties, and represent you to make sure that all of YOUR interests are being protected. Remember, a listing agent represents the seller, and is motivated to get the best price for the seller.
Saving 3 % on the deal sounds great, but often a buyer agent's knowledge will allow you to pay far less for the home. For instance, our buyer brokerage is averaging over 20% off list price for our clients, while the Sarasota average is 10%.
I do worry about issues that may snag you, so would recommend at this point that you do retain the services of a lawyer to make sure that you are protected and nothing has been overlooked.
I wish you the very best of luck in your new home.
- lynrosect
- Contributions:129
Thanks! Since I am a lawyer and I don't specialize in RE law, one of the first things I did was hire a RE lawyer. Research, my RE lawyer and Zillow have taught me more than I ever wanted to know about real estate. As you say, being well informed is highly important.
- LyndieQ
- Contributions:236
Way to go, lynrosect! It can be done, obviously. Also, obviously, there won't be too many agents who will approve.
- Space_Truss
- Contributions:177
..............but often a buyer agent's knowledge will allow you to pay far less for the home................
Regina. I am sorry but this is not true. This is absolutely not true. !
Lynrosect. I tried negotiating buyer's agent commission when I was on the market without an agent in the past. It depends on the contract between the sellers and their agent. You can't always get 3%. I found out that working with a buyers agent and letting him to do all arrangements and showing you thousands of houses is easier.
Simply offer 3% lower than your lowest offer. Don't forget, this is not a buyers market, this is a crashed market in the deepest global recession. Everything is possible.
Regina. I am sorry but this is not true. This is absolutely not true. !
Lynrosect. I tried negotiating buyer's agent commission when I was on the market without an agent in the past. It depends on the contract between the sellers and their agent. You can't always get 3%. I found out that working with a buyers agent and letting him to do all arrangements and showing you thousands of houses is easier.
Simply offer 3% lower than your lowest offer. Don't forget, this is not a buyers market, this is a crashed market in the deepest global recession. Everything is possible.
lynrosect,
I am not an Attorney so if I'm wrong let me know, but how can you make an Agreement between Buyer and Seller to adversely affect a contract between Seller and Listing Brokerage? Basically my question is that, even though the Seller agrees to your contract, the term by itself does not supersede the Agreement between Seller and Seller's Agent. I would assume that the Listing Agreement would also have to be Amended to actually enforce the term agreed to you on your contract. I might be wrong, but just because Buyer and Seller agree does not mean that the term is enforceable (unless of course Agreed upon by the Selling Agent's Principal or Broker-In-Charge).
I'm not saying that you can't negotiate the Buyer's commission, I'm merely pointing out that there seems to be a missing link in your example.
1) Either that term was already writtne into the Original Listing Agreement (that unrepresented buyer's commission reverts back to Seller).
or
2) There is a new Amendment to the Original Listing Agreement between Seller and Listing Brokerage.
or
3) Buyer and Seller have an Agreement for a Purchase, with language that contradicts the intact Listing Agreement (but leave that to the parties and their Attorney's to untangle).
I am not an Attorney so if I'm wrong let me know, but how can you make an Agreement between Buyer and Seller to adversely affect a contract between Seller and Listing Brokerage? Basically my question is that, even though the Seller agrees to your contract, the term by itself does not supersede the Agreement between Seller and Seller's Agent. I would assume that the Listing Agreement would also have to be Amended to actually enforce the term agreed to you on your contract. I might be wrong, but just because Buyer and Seller agree does not mean that the term is enforceable (unless of course Agreed upon by the Selling Agent's Principal or Broker-In-Charge).
I'm not saying that you can't negotiate the Buyer's commission, I'm merely pointing out that there seems to be a missing link in your example.
1) Either that term was already writtne into the Original Listing Agreement (that unrepresented buyer's commission reverts back to Seller).
or
2) There is a new Amendment to the Original Listing Agreement between Seller and Listing Brokerage.
or
3) Buyer and Seller have an Agreement for a Purchase, with language that contradicts the intact Listing Agreement (but leave that to the parties and their Attorney's to untangle).
- Lorie Gould, "Homes By Lorie"
- Contributions:355
lynrosect, I appreciate the fact that you are happy about your purchase and the deal you received. I wish you many years of enjoyment in your new home.
"Chutta" I appreciate your contract knowledge as you are on the money.
I have sold many homes in my years as a Realtor. I have sold homes to represented buyers and to unrepresented buyers. Although the perception from unrepresented buyers is that they are saving the buyers agent commission by not having an agent the reality is this perception is not reality. How do these buyers know that they could not have received the same deal if not a better deal with representation? They do not! It is their perception that they are saving the 3% but reality is the seller is gaining 3% if the listing agent agrees to modify their listing contract with the seller to reduce the commission.
Real estate attorneys are great. They understand contracts and real estate law; however, they are not selling homes day in and day out to understand the real trends in the marketplace.
The bottom line is that a "deal" is in the eye of the beholder. It is all about perception and consumers are fed so much mis-information on a daily basis that there is no wonder perceptions can be so inaccurate.
- lynrosect
- Contributions:129
The contract between the listing broker/agent and the seller is a contractual obligation between the listing broker/agent and the seller. The listing/broker agent has negotiated their terms of the contract to receive a negotiated commission. Upon the sale of the property, the listing/broker agent can do whatever they want with their negotiated commission. At closing, the listing/agent broker can agree to revert a percentage of this commission back to the seller. The sales contract asking for the concession of the commission of the buyer agent/broker to be reverted back to the seller negotiates what the listing agent/broker will do with their commission once recieved. It does not influence or negate or alter the original listing contract between the listing agent/broker and seller. The listing broker/agent either agrees to the term or they don't.
I agree a good "deal" is all about perception and knowledge. Some may benefit from swimming in the RE market w/o a buyer agent while some may not.
. The sales contract asking for the concession of the commission of the buyer agent/broker to be reverted back to the seller negotiates what the listing agent/broker will do with their commission once recieved. It does not influence or negate or alter the original listing contract between the listing agent/broker and seller. The listing broker/agent either agrees to the term or they don't.
Theoretically, could you have a fully binding Agreement between Buyer and Seller (based on the example) without an Agreement between Seller and Seller's Brokerage? Meaning that the Seller could sign your offer with no intention of negotiating the commission or paying less to the Listing Agent, and since the Buyer and Seller get seperate HUD-1 statements, you the Buyer actually would have no "definitive" knowledge that the Seller is getting the commission reduction.
Theoretically, could you have a fully binding Agreement between Buyer and Seller (based on the example) without an Agreement between Seller and Seller's Brokerage? Meaning that the Seller could sign your offer with no intention of negotiating the commission or paying less to the Listing Agent, and since the Buyer and Seller get seperate HUD-1 statements, you the Buyer actually would have no "definitive" knowledge that the Seller is getting the commission reduction.
"Basically my question is that, even though the Seller agrees to your contract, the term by itself does not supersede the Agreement between Seller and Seller's Agent. I would assume that the Listing Agreement would also have to be Amended to actually enforce the term agreed to you on your contract."
As I read the post here, the clause concerning the reversion of half the commission to the seller is a contingent provision. So, if the listing agent/broker refuses to amend their listing agreement, no deal. Up to them. 8P Good going Lynrosect.
As I read the post here, the clause concerning the reversion of half the commission to the seller is a contingent provision. So, if the listing agent/broker refuses to amend their listing agreement, no deal. Up to them. 8P Good going Lynrosect.
The reason that is very possible is that if the Seller's Agent will not renegotiate the commission, but the Seller wants to make the sale anyway. Their is more risk to the Seller to actually counter you at same price (you offered) with the removal of the "request to lower Agent's commission" rather then accepting the existing Offer with no intention of honoring an unenforecable request on the Offer Contract.
Why is there more risk to the Seller? Because not knowing the Buyer... The Buyer could see a Counter offer of no reduction in Agent's commission as an opening to even offer lower and therefore there is even further risk of Seller making less on the Purchase.
Why is there more risk to the Seller? Because not knowing the Buyer... The Buyer could see a Counter offer of no reduction in Agent's commission as an opening to even offer lower and therefore there is even further risk of Seller making less on the Purchase.
Course, many listing agreements are silent with respect to what happens to commission dollars when there is no buyers' agent, so a formal amendment/renegotiation may not be necessary at all...
the clause concerning the reversion of half the commission to the seller is a contingent provision.
Sure its a contingent provision, but its unenforceable, because Buyer is not privy to the payment or reversion and is not affected by the action of paying or not paying of the commission. Buyer still gets the property at price offered.
Sure its a contingent provision, but its unenforceable, because Buyer is not privy to the payment or reversion and is not affected by the action of paying or not paying of the commission. Buyer still gets the property at price offered.
I don't see why it would be unenforceable. It is common practice within the industry for commissions to be reduced. Anyway, the buyer doesn't really give a rat's butt whether or not the seller agent coughs up the money to the seller. They just want their offered price and the clause at issue here is purely a mechanism for casting light on the commission structure and opening the door to access to those buyers' side dollars on the part of the seller in order to help that happen.
I don't see why it would be unenforceable.
1) As a stand alone contract. The Purchase Contract is an Agreement between Buyer and Seller (no Agreement necessary from an Agent). Therefore any Agreement made solely on this contract is not binding on the Seller's Agent to perform.
2) How does the Buyer enforce that contingency? Even if the the Seller's Agent takes 1/2 the listing commission in Escrow. The Seller is still responsible for the remaining portion of the commission outside of escrow (per the standard language of most listing agreements). The relationship between Seller and Seller's Agent does not end with the sale of the property to Buyer. It ends when full agreed upon commission is paid, where as any realtionship between Buyer and Seller will end with the conveyance of the property. So even after Buyer is out of the picture, Seller has a responsbility to fulfill the Agreement between Seller and Seller's Brokerage.
They just want their offered price and the clause at issue here is purely a mechanism for casting light on the commission structure and opening the door to access to those buyers' side dollars on the part of the seller in order to help that happen.
really? or is that just your general bias towards the issue. nowhere in the post did OP say that her intent was to cast light on the commission structure issue. If that is the intent, fine, but just because you want to "cast light" on an issue, doesn't make the "request to reduce commission" an enforceable contingency.
It's Lynrosect's offer, and she is an Attorney, how does she see the "request" she made enforeceable, should the Seller sign and the Seller's Agent not agree?
1) As a stand alone contract. The Purchase Contract is an Agreement between Buyer and Seller (no Agreement necessary from an Agent). Therefore any Agreement made solely on this contract is not binding on the Seller's Agent to perform.
2) How does the Buyer enforce that contingency? Even if the the Seller's Agent takes 1/2 the listing commission in Escrow. The Seller is still responsible for the remaining portion of the commission outside of escrow (per the standard language of most listing agreements). The relationship between Seller and Seller's Agent does not end with the sale of the property to Buyer. It ends when full agreed upon commission is paid, where as any realtionship between Buyer and Seller will end with the conveyance of the property. So even after Buyer is out of the picture, Seller has a responsbility to fulfill the Agreement between Seller and Seller's Brokerage.
They just want their offered price and the clause at issue here is purely a mechanism for casting light on the commission structure and opening the door to access to those buyers' side dollars on the part of the seller in order to help that happen.
really? or is that just your general bias towards the issue. nowhere in the post did OP say that her intent was to cast light on the commission structure issue. If that is the intent, fine, but just because you want to "cast light" on an issue, doesn't make the "request to reduce commission" an enforceable contingency.
It's Lynrosect's offer, and she is an Attorney, how does she see the "request" she made enforeceable, should the Seller sign and the Seller's Agent not agree?
- lynrosect
- Contributions:129
It is true that without the listing broker/agent initialing the offer/sale contract, the listing agent/broker may try to refuse to relinquish the precentage to the seller; however, the listing agent/broker through the original listing agreement is under an obligation to look out for the seller's best interest. If they do not reliquish the funds to the seller due to the listing agent/broker not recognizing the clause in the signed sales contract...then the seller has legal remedies against the listing agent/broker for their breach of duty to the seller.
Why would a listing agent/broker want to not represent the seller to the best of their abilities? If the listing agent/broker is not aware of the clause in the contract, then they are not representing their client when they advise them to sign the contract. If they are aware but they intend to ignore the clause when the money exchanges hands, then they are not abiding by their duty to their client...the seller. If they want to keep the entire 6% commission, then they may advise theire client to not sign the contract and the offer is off the table.
Anyhow, as stated by K101, once the clause is accepted with the offered purchase price on the sale contract, as a buyer, whether or not the money exchanges hands is none of my concern. I am under the opinion that most listing agents/brokers would not allow a seller to sign a contract with the clause unless they were willing to honor the clause. My opinion could also be wrong.
Why would a listing agent/broker want to not represent the seller to the best of their abilities? If the listing agent/broker is not aware of the clause in the contract, then they are not representing their client when they advise them to sign the contract. If they are aware but they intend to ignore the clause when the money exchanges hands, then they are not abiding by their duty to their client...the seller. If they want to keep the entire 6% commission, then they may advise theire client to not sign the contract and the offer is off the table.
Anyhow, as stated by K101, once the clause is accepted with the offered purchase price on the sale contract, as a buyer, whether or not the money exchanges hands is none of my concern. I am under the opinion that most listing agents/brokers would not allow a seller to sign a contract with the clause unless they were willing to honor the clause. My opinion could also be wrong.
Getting a little testy there, Chutta? I can see why agents might not like the idea of casting light on the commission issue...
I obviously can't speak for Lynrosect - but I can speak from a buyer's perspective, and what I said was my take on it. As far as enforceability is concerned, the clause here seems somewhat similar to a financing contingency to me. The seller isn't party to the buyer's dealings with their lender, and has no control over the terms of the buyer's loan. The clause lets the buyer out of the deal if financing isn't obtained. The seller doesn't otherwise care where the buyer gets their money as long as there is money available to do the deal. Here, the clause could let the seller out of the deal if a (greedy) seller's agent refuses to reduce their commission. The buyer doesn't otherwise care what the seller gets from their agent.
I obviously can't speak for Lynrosect - but I can speak from a buyer's perspective, and what I said was my take on it. As far as enforceability is concerned, the clause here seems somewhat similar to a financing contingency to me. The seller isn't party to the buyer's dealings with their lender, and has no control over the terms of the buyer's loan. The clause lets the buyer out of the deal if financing isn't obtained. The seller doesn't otherwise care where the buyer gets their money as long as there is money available to do the deal. Here, the clause could let the seller out of the deal if a (greedy) seller's agent refuses to reduce their commission. The buyer doesn't otherwise care what the seller gets from their agent.
Oh, and I am an attorney too. 8)
- lynrosect
- Contributions:129
I didn't think agents would like this post either. I posted it for the lurking and reading buyers on this site. I was a lurker for over 6 months and thought I could possibly help someone somewhere out.
Why would a listing agent/broker want to not represent the seller to the best of their abilities?
The argument that by not accepting less of an agreed upon (contractually obligated) payment for services is somehow "not representing the seller to the best of their abilities". Following that reasoning why should the Agent accept anything? They should give up all their commission, because actually that would be the best return for their client. I might be alone on this, but the argument that accepting less (then contractually agreed upon) is incumbent on the Agent to fully represent their client is ludicrous. why have any agreements then.
If the listing agent/broker is not aware of the clause in the contract, then they are not representing their client when they advise them to sign the contract.
True. I agree that if the Agent doesn't make the Seller aware of the issue then they are failing the client, but it also works in another way. The Agent cannot stop the Seller from signing the Agreement. The Agent is required to present all offers, the Agent cannot make the Seller not sign the agreement.
The argument that by not accepting less of an agreed upon (contractually obligated) payment for services is somehow "not representing the seller to the best of their abilities". Following that reasoning why should the Agent accept anything? They should give up all their commission, because actually that would be the best return for their client. I might be alone on this, but the argument that accepting less (then contractually agreed upon) is incumbent on the Agent to fully represent their client is ludicrous. why have any agreements then.
If the listing agent/broker is not aware of the clause in the contract, then they are not representing their client when they advise them to sign the contract.
True. I agree that if the Agent doesn't make the Seller aware of the issue then they are failing the client, but it also works in another way. The Agent cannot stop the Seller from signing the Agreement. The Agent is required to present all offers, the Agent cannot make the Seller not sign the agreement.
If they want to keep the entire 6% commission, then they may advise theire client to not sign the contract and the offer is off the table.
Again this is true, but my point is that your illustration is far from binding. As stated above and this is a "what if", the Seller decides that this is a good price and they will pay the 6% commission regardless. What is to stop them from signing the Agreement? You will never know if the Seller's Agent gets full commission or not. Also in essence by trying to "shine the light" as K101 stated you are actually costing yourself and "leaving money on the table. Why? Because you will never know with certainty whether the Seller got the rebate of 3% or not, and if they do not get the rebate then you probably could have offerred 3% less and still got the property.
Again this is true, but my point is that your illustration is far from binding. As stated above and this is a "what if", the Seller decides that this is a good price and they will pay the 6% commission regardless. What is to stop them from signing the Agreement? You will never know if the Seller's Agent gets full commission or not. Also in essence by trying to "shine the light" as K101 stated you are actually costing yourself and "leaving money on the table. Why? Because you will never know with certainty whether the Seller got the rebate of 3% or not, and if they do not get the rebate then you probably could have offerred 3% less and still got the property.
Getting a little testy there, Chutta? I can see why agents might not like the idea of casting light on the commission issue...
Its not a matter of testy. You are melding two seperate arguments to the same issue and passing them off as one in the same.
Issue 1 - from OP
1) She made a "contingency" that is not necessarily binding. Just trying to sort that out.
Issue 2 - your pet peeve
2) Commission Structure and educating the Public about the two.
Two very different points which I don't mind arguing, but let's not confuse them as being one in the same. That doesn't help the Lurkers either.
Its not a matter of testy. You are melding two seperate arguments to the same issue and passing them off as one in the same.
Issue 1 - from OP
1) She made a "contingency" that is not necessarily binding. Just trying to sort that out.
Issue 2 - your pet peeve
2) Commission Structure and educating the Public about the two.
Two very different points which I don't mind arguing, but let's not confuse them as being one in the same. That doesn't help the Lurkers either.
"Also in essence by trying to "shine the light" as K101 stated you are actually costing yourself and "leaving money on the table. Why? Because you will never know with certainty whether the Seller got the rebate of 3% or not, and if they do not get the rebate then you probably could have offerred 3% less and still got the property."
Coulda, shoulda, woulda, Chutta. The assumption here is that the buyer is happy with the price stated, and that price takes into account an additional 3% reduction from "market." I find this discussion interesting because the clause at issue informs a seller of the fact that they can negotiate that 3% reversion with their agent, and -no matter what- opens the door to an opportunity for that seller to take 3% less. I believe that many sellers out there are not aware of that possibility.
Coulda, shoulda, woulda, Chutta. The assumption here is that the buyer is happy with the price stated, and that price takes into account an additional 3% reduction from "market." I find this discussion interesting because the clause at issue informs a seller of the fact that they can negotiate that 3% reversion with their agent, and -no matter what- opens the door to an opportunity for that seller to take 3% less. I believe that many sellers out there are not aware of that possibility.
in regards to the being similar to the financing contingency.
The main reason why they are not similar is that...
1) Financing Contingency - financing the property and the ability to finance the property has a direct and indisputable impact on the ability to close the transaction.
2) A contingency to pay 3% or 6% is not material to the closing of the transaction. Unless the sale is underwater, the disbursement of said payment does not happen until after the property has effectively been conveyed from 1 party to the other. If anything the so-called "reversion of commission" contingency is itself contingent on the the Buyer's abilty to obtain financing.
The main reason why they are not similar is that...
1) Financing Contingency - financing the property and the ability to finance the property has a direct and indisputable impact on the ability to close the transaction.
2) A contingency to pay 3% or 6% is not material to the closing of the transaction. Unless the sale is underwater, the disbursement of said payment does not happen until after the property has effectively been conveyed from 1 party to the other. If anything the so-called "reversion of commission" contingency is itself contingent on the the Buyer's abilty to obtain financing.
Unless the sale is underwater - remove that from last post. Different thought.
Of course they aren't technically the same, Chutta. But, nowadays, that 3% very well might make the difference between whether that house will go underwater. Perhaps the sale price puts the house slightly underwater, but the seller is able to use savings to bring cash to the table that will then be replaced by that 3% reversion... We can make up fantasy scenarios all day.
As a Buyer w/o an Agent, you can negotiate the Buyer Agent Commission
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