Since it is illegal for real estate agents to talk about commissions amongst themselves, I respectfully ask that persons with real estate licenses refrain from commenting on this post.
Sellers, here is something to think about. Lets say you have your home listed for 200K. A buyer comes along and makes an offer and asks that you pay buyer closing costs. They offer you 206K, and ask for you to pay 6K of their closing costs.
When you go to the closing, will you be charged a commission by your Realtor based on 206K, or on 200K.? In most cases it will be on 206K. Amazingly in this situation the sale price is 206K and commissions are usually based on the sale price.
Ask your agent if you will be paying a commission on the buyers closing costs. Remember that real estate commissions are always negotiable, and it is always OK to ask questions.
I think we should get paid on the inflated sales price. In fact I also do at no objection by the seller. It is a slippery slope of giving away our hard earned dollars.
Teresa – not going to talk about commissions!
What I will add is that it is our responsibility as professionals to inform our sellers of this situation if presented with this type of offer. As far as I am concerned seller concessions should not be “touched”. I wish our MLS board still allowed these comments, to inform buyer’s agents.
Thanks Jennifer. I see this as a consumer issue, which is why I wrote the post. Maybe we can spread the word by blog.
This is directed to Poster #1 – (9:13pm)
Recently I ordered a hamburger at a mid- priced restaurant in Minneapolis. The server asked if I wanted lettuce and tomato – I said sure. No indication on the menu said that there was an extra charge. I got hit for a buck fifty. For a lettuce leaf and a slice of tomato. Nice.
Before you think I am a cheapskate, I am a former waiter who usually tips 25%. But that little gotcha ticked me off enough that I tipped 8% for the first time in my life. It is the principle that bothered me. It’s a sneak upcharge. I don’t mind paying. I mind being tricked.
If you fully disclose commission is paid on total sale price up front, then fine. People can price that into the equation. However, it seems to me that the agent has nothing to do with whether closing costs are paid separately, or financed, or the amount of those costs. Why is a commission due on that amount then?
Because you CAN, apparently. There are lots of things that that we ‘can’ do. Not all of them are things we ‘should’ do.
B
Love your comment B. The commission is charge on the sale price. that is the number in dispute. I when the seller pays the buyers closing costs they should not pay a commission on the sales price – the closing costs. My peers often disagree as you can see by an earlier comment. since the listings are in the MLS we have rules about commission payouts. The best thing I can do is make consumers aware of this. As an agent I make my clients aware of this. they need to know they don’t have to pay a commission on the inflated sale price.