Profile picture for randpeter

Buyers agent to use some of their commision for repairs?

Hello,  I am not using a buyers agent to purchase a home so the sellers agent will keep the full 6 - 7 % of the commision.   She is an owner / agent so does not work for one of the big companies and therefore does not have to pay commision to someone else.   The older owner who is selling needs as much of the proceeds as possible to settle mortgages etc.  Limited essential repair costs will be about 1.5% of the sale price to address problems found during the inspection.   Is it reasonable to expect the sellers agent to pay for these repairs still leaving them with 4.5 to 5.5 % commision?  The sellers agent says the seller has no money to pay for the repairs.   I appreciate your feedback and comments.  Thank you. 
  • January 24 2011 - Ravenna
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Answers (20)

Dear randpeter;

You can discuss this situation with the 'dual" agent that you have written the offer with.  This agent does in fact owe you fiduciary responsibilities, as well as owing the seller fiduciary responsibilities.  He or she should be willing to work with you a little bit on this.
Contrary to some other advice I've seen, I would steer clear of contacting an attorney regarding this.  Attorneys in my opinion tend to complicate matters, oftentimes in THEIR interest, since, by the way, they DO NOT work for free.  The more work they do, the more they can and will bill out.  Our local MLS documents have been prepared, used, and modified by real estate attorneys, and are designed to be fair documents to both buyers and sellers.  I have been using these forms for many years now, and there is nothing an attorney can do to make the process any better.  I have had attorneys in their arrogance muck up a perfectly fair, arms-length transaction just to charge very high fees to the poor sap that used them.  Based on
this question of yours, why would anyone recommend contacting an attorney?  I saw no red flags to even consider using an attorney. 
  • January 27 2011
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Profile picture for Connie Klemme
some ofthe confusion in answers comes from your comment she is an owner/agent so does not work for one of the big companies...it's getting mistaken for the owner of the property being the agent.   The problem is that you're into the transaction now without representation- you likely can't bring an agent into the mix but you can take your contract to a real estate attorney for advice and guidance.  I'd reccommend doing that.  start by contacting some agents and see if their is an attorney in their office. 
  • January 26 2011
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Find an agent that has your best interest. A good agent could have gotten the repairs done for you by adding it in the contract. Also, the agent is the owner of the property so who's best interest do you think he/she has?
  • January 25 2011
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I would get advice from an agent in the area.  You need a professional and someone looking out for you.  Dont think you are saving any money.
  • January 25 2011
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Wow, I cannot believe that anybody would not have a buyer's agent to represent them! The listing agreement is between the seller and their listing agent. The agent may not want to give up commision that they are going to be required to pay E and O and B and O  taxes on.
  • January 25 2011
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Profile picture for randpeter
Rob,
Thanks for your feedback. 

Would it be too late at this point to sign a buyers agent agreement to have a buyers agent represent us?  We have already signed the Offer to Purchase with the seller and that has already been accepted / signed by the seller.  

We have carried out the inspection and still need to negotiate the repairs that are needed.

Your thoughts?
Thanks again.   
  • January 25 2011
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Wow, I am having a hard time finding the advantage of not having an agent represent you.  The listing agent (now dual agent) has no obligation to pay for anything.  They have signed an agrement with the seller to provide a service for a comission.  I will give you the same advice that I give all my friends and family out of state that I can not represent. 

Find the best agent you can and have them represent you. 

Most buyers think they are saving a buck by representing themselves, but I have run the numbers and my buyers on average save more money being represented by me then working with either a discounted agent or no agent at all. 

As you are finding out this type of negotiation can be difficult.  Not to mention understanding all your legal obligations in the process.  Why not have someone working for you at no charge to you? 

Best of luck, but I would recommend finding someone you trust and letting them do their job.  It IS worth it.
  • January 25 2011
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Profile picture for nwhome.us
@randpeter,
As you can see, one of the primary tasks of a buyer's agent is to educate the buyer on the details of the agreements that are set up between sellers and their agents.
Another task is to put into perspective the tools that can be used in negotiating with a seller.
Some buyer's agents also have valuable experience in building that can help you better understand the implications of reapirs being done.  Home many licensed home & pest inspectors do you know?
We work with lenders on every transaction which gives us experience with a cross section of that industry.  We learn the pitfalls of lending.
I'm always surprised when buyers think that getting 40-45% (2-2.5% of the Sales Price) out of a Listing agent's commission is anything compared to the 5-10% of the Sales Price that a good Buyer's agent can find, given the right circumstances. 
  • January 25 2011
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Profile picture for randpeter
Thanks Joe and Hal for your comments, much appreciated.
  • January 25 2011
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Although you are not using a buyer's agent, if the home is listed by a selling agent then you are most likely being represented by them in a dual agency situation, meaning they represent both the buyer and the seller...and this relationship needs to be fully disclosed and agreed to by all parties.

When a home is listed, a commission rate is established by the seller to the listing agent and the selling agent.  The seller dictates this and usually is it 3% for both parties, although it can vary.  Since the listing agent never knows if it will be acting as the selling agent too, they usually request or set a commission amount for successfully acting as listing agent when it sales.  And since there is no buyers agent in this transaction, the listing agent would also receive that predetermine amount.

I would suggest you have dialog with the seller's agent and determine if you are being represented by them as well.  It might help establish some dialog about the repairs.

Keep in mind, agents are prohibited by law from discussing what they are being paid from the seller.  This is a contract between the seller and the listing agents company. Technically what they are being paid isn't to be discussed with anyone (including other agents).  The only amount of commission made public is the sales office commission (or buyer's agent commission) which is disclosed in the online listing.

Ask yourself how much you want this home, and if you are requested to make these repairs, would you still be happy with the price?

Good luck.
  • January 24 2011
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Profile picture for Hal Hovey
I normally do not believe the agent should be asked to help pay for repairs, regardless of how much their commission is.  The agent is not a party to the contract. 

In some cases I wouldn't even expect the seller to pay the entire cost of repairs.  For example, if the roof or siding require replacement, I would typically expect the buyer to split the expense with the seller since these items have a useful life of 25 years or more.  

For more mundane issues, such as items that have failed due to a lack of ongoing maintenance, I would say it is usually the seller's expense, but definitely not the agent's. 

Good Luck!
  • January 24 2011
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Profile picture for randpeter
Thanks Christine and Angela for your comments - both very useful pieces of information for me to work with.  Thanks again.
  • January 24 2011
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Hi!

If the Listing/Selling Agent isn't paying a Buyer Agent (since that's what the other half of the commission is for) there's a very good chance she is only getting the 3%.  Typically an agent keeps both sides when she is the Listing Agent and ALSO brings/represents the buyer.

Regarding repairs, there are huge potential legal ramifications if an agent contributes to any repairs.  Therefore, if the agent were getting both sides of the commission it would be better for her to do a commission adjustment for her seller vs. paying for inspection deficiencies... but, in my opinion, I think that would be a conversation the seller should have with her listing agent vs. it coming from you.  

Remember, the agent is working for her client (as she should), so her job is to try to negotiate in her client's best interest meaning she is going to begin negotiations giving up as little as possible.  That said, your contract probably gives you the option to walk away if you and the seller cannot come to terms...try countering (if you haven't already).  If that doesn't work consider excercising your right to walk away... the seller may very likely have a change of heart and find a way to compromise. 

Hope this helps!  ~Cheers!

  • January 24 2011
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No agent should be expected to pay for repairs out of their commission. If the seller is unable to make repairs and you are not willing to take on the expense, you may want to seek out another property.
  • January 24 2011
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Profile picture for randpeter
Tonya, thanks for your insights,very useful to hear about this side of the story too!
  • January 24 2011
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It shouldn't be expected for the agents to pay for the repairs on a house they do not know. Regardless how much you think they are getting paid,  you still do not know all their expenses, tax burden or how many hours they have into the transaction. It is foolish to assume we make a huge profit. By the time all is said & done and we've paid our Realtor fees, member fees to the MLS, education costs, supplies, gas, marketing dollars, time etc we average a normal salary as the average Joe.

If your agent wants to make a concession to the make the deal work than cool. To expect them to, not cool.
  • January 24 2011
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Profile picture for randpeter
Cassie, thanks for your response.  I am not aware of the sellers agent having negotiated a lower commision % with the seller.  When I briefly suggested this approach the other day she did not mention that she was getting a smaller commision from the seller.   I expect I will see what the commision % is at closing, but I will ask about this sooner since we need to work on getting the repairs done soon.
Thanks.
  • January 24 2011
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Yes! It is very reasonable to expect them to contribute toward repairs IF they are being compensated a full 6%. 

However, if it's possible they're already discounting themselves if the seller has asked them to. 

As a real estate agent myself, it is absolutely not inappropriate for you to ask the agent, to contribute some commission. It's also not inappropriate for you to ask if they're getting compensated on both ends, and how much. 

Just my two cents.
  • January 24 2011
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Yes, I am dealing directly with the sellers agent.  I do not have a buyers agent representing me.   Thanks.
  • January 24 2011
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Hi, to clarify, are you representing yourself as the buyer and negotiating directly with the selling agent or the actual seller?

  • January 24 2011
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