Posted by Chireen on August 22, 2003 at 04:24:22:
Keep in mind, this isn’t legal advice. This is my understanding of the situation:
The Broker is entitled to any commission he and the Seller agreed to when they wrote the Listing Agreement (or if he’s not the Listing Broker he’s still entitled to any commission he would have received if he brought a different Buyer other than himself). Be sure and disclose, disclose, disclose to the Seller if he is the Listing Broker so no perceived conflict of interest can bite him later…ESPECIALLY if he is buying the house for less than the appraised value.
He can reduce the down payment (or apply his commission to the down payment) if the Lender allows it. He will need to ask his Lender. I’d have to look that up on an FHA or VA loan, but most conventional lenders will allow this.
He can use the commission for his closing costs if the Lender allows it. Again, he will need to ask his Lender. Or instead of showing his commission on page 2 of the HUD-1 and then giving him a credit on page 1 of the HUD-1, he can show no commission and the Title co. can move that amount of closing costs onto the Seller’s side of the HUD-1. Don’t need Lender approval for this - need Seller’s approval for this. It should be written into the sales contract that the Broker will receive $0 commission and that the Seller will pay $x towards the Buyer’s closing costs.
He can reduce the purchase price in lieu of commission if the Seller agrees.
Hope that helps!
“My 2 cents worth…and priced just right!”