realtor commission - Posted by JWPOST

Posted by Clair-MO on October 19, 2003 at 11:50:48:

Talk to the broker and see if he or she will be willing to be paid on a monthly basis until the $2,500 is paid off. Just a thought???

realtor commission - Posted by JWPOST

Posted by JWPOST on October 19, 2003 at 09:45:22:

I finally found a deal on a solid 2 family house where the owner is willing to hold some or all the paper. Problem is the realtor wants their money 6% of $75000. I only have $2000. Should I look into getting my own financing or what are my options?

Negotiate the realtor commission - Posted by John J.

Posted by John J. on October 20, 2003 at 10:26:28:

Please understand that everything is negotiable until all parties have signed a contract. Look at it from the real estate agent’s perspective. If you do not purchase the property and an offer comes in through another agent then the commission is going to be split and he/she only ends up with 3%. If the listing expires and the seller hires another agent, then he will get nothing. So, if only one agent is involved, it is not unreasonable or unusual for the commission to be reduced to the 3% range. For that reason, I prefer to make my offers through the listing agent. My strategy is to make an initial low-ball offer. Then as we go back and forth, I will increase my offer price incrementally and hopefully the seller will come down a bit each time; until we are about 8% - 10% apart. Then I will counter with an offer that we split the the difference three-ways: the seller, I, and the agent. The purchase price would then be reduced by whatever the agent kicks in. I have also seen agents partially pay for closing costs, pay off a judgement for a buyer who otherwise could not qualify for a mortgage, or put money in a repair escrow, all out of their commissions, but only when no other agent was involved.

Two agents were involved in the last property that I sold and they each received 1/3 of their earned commissions at closing and the remainder in equal installments over 6 months. The buyer signed a note secured by the property for this.

In your case, you might pay $1,000 at closing to go towards the commission and use the other $1,000 for various closing costs (where is the money going to come from to pay for the seller’s portion, such as title insurance, etc.?), escrows for taxes and insurance, etc. If the place is currently rented you might schedule to close at the first of the month. Not only will the seller transfer to you the tenants’ securety deposit, but you also get to collect that month’s rent, while your first mortgage payment is not due until at the end of that month, when hopefully the tenants will pay their next month’s rents.

Re: realtor commission - Posted by Brent_IL

Posted by Brent_IL on October 20, 2003 at 01:56:15:

If the seller has the cash to pay the agency fee, there won’t be a problem. Otherwise, I have to agree with Hank and Wayne.

Wayne is right that a loss of opportunity cost has to be considered to fully understand the total expenses related to any transaction. That?s not the major challenge here. I believe, as Hank does, that the seller?s needs are your problem if you want to buy his property.

If you say that the commission is the seller?s problem, and he doesn?t pay, closing will be difficult, and you?ll wind up as the subject of a cross-claim for the commission. I think this is the same as any other lien that has to be addressed before we close. I believe that you?ll have to assume control and negotiate, as was suggested, with the broker and agent involved. But first, I?d ask the seller what he intended to do about his listing agreement.

It IS your problem - Posted by Hank FL

Posted by Hank FL on October 19, 2003 at 22:52:28:

I’ve got’a disagree with guys that have FAR more experience than I.

In most transactions the money to pay the Realtor comes from the $ the buyer provides.

I heard someone say the other day that renters don’t pay property taxes.

Really ?

I also think of the guy that supposes that he only pays half of the FICA tax going to Uncle Sam. The employer pays the other half, right ?

Not really.

OK, back to your deal.

I have no idea what your deal is w/the seller, but if he’s not getting much, if any money out of this deal because he’s gonna take back a mortgage/trust deed, I’m betting he doesn’t want to hand whatever he get’s over to the Realtor.

If this deal is sweet enough, this commission thing is really your concern.

Is the selling broker getting the whole commission w/out splitting it ?

You might want to find a “partner” that will front the $ for some benefit(s) of the deal.

You could pass the tax benefit and/or cash flow to this person for an X period of time. The things you could negotiate are limitless.

But what do I know.

This link might be of intrest now of perhaps in the future:

Re: realtor commission - Posted by Phill

Posted by Phill on October 19, 2003 at 22:39:09:

Have you filled out the Buyer/Tenant Agreement? If you haven’t you will at some point. There is a line that says: Source of Commission Payment. It tells who pays. Look for the line that basically says if the seller refuses to or fails to pay the Broker. Client (you) will pay the Broker. Cross it out and initial it. That will let your Agent/Broker know you won’t pay it. I point this out to all my buyers. It is typically the sellers responsability to pay. If it is a deal breaker, you could always agree to pay all or part of the commission.


Re: realtor commission - Posted by phil fernandez

Posted by phil fernandez on October 19, 2003 at 15:47:54:

I agree with Brad. Why are you worried about paying for the commission? If the seller contracted with the realtor to sell the property then it is the seller’s responsibility to pay the commission.

Sounds like you and the seller have agreed on a deal. Now it’s up to the seller to pay his realtor for putting the deal together. This will test the seller’s motivation level.

This isn’t your problem - Posted by rm

Posted by rm on October 19, 2003 at 15:46:10:

The real estate commission is a contractual issue between the seller and the agent.

Your contract is with the seller, not the agent.

Any shortfall is not your concern- let the agent and the seller work it out.

If the agent is looking to kill your deal as a result of the commission, I suppose the real issue is: how many other buyers do they have?

Re: realtor commission - Posted by Brad Crouch

Posted by Brad Crouch on October 19, 2003 at 12:39:22:


Why are YOU paying the realtors commission?

If this is part of a deal you made with the seller, why not ask the seller to front the lacking funds?


Re: realtor commission - Posted by Clair-MO

Posted by Clair-MO on October 19, 2003 at 10:52:34:

JW, 6% of 75,000 is $4,500 for commission, right? If you have $2,000 talk to the agent’s broker to take back a note for 90 days or 120 days payable at that time. Seems fair and reasonable to me if you give the realtor the $2,000 and have them take back the balance of their commission until you can get the $2,500 from the tenant-buyer if you are going to lease option the home. What do you think?

Re: realtor commission - Posted by jw post

Posted by jw post on October 19, 2003 at 11:30:37:

I am going to rent the units as there are tenants already in them. I still need to come up with the $2500 and do not know where to get it other than borrow it which if i do that the deal becomes less appealing to me.

Re: realtor commission - Posted by Wayne-NC

Posted by Wayne-NC on October 19, 2003 at 12:45:25:

Whether you know it or not you are always “BORROWING” funds for any RE purchase. For example, where did your 2K come from? You borrowed it from yourself. If the agent accepts a note or any form of payment other than cash you are borrowing from the agent. If you pay the agent cash you are borrowing from someone or something else. There is no such thing as a cash purchase for anything unless you keep your cash under the mattress or in a can buried in the backyard. In conclusion, if this deal makes sense with all costs associated with it then do it. Those hidden costs that I speak of are especially the loss of income costs of invested funds which you will use as cash. I say hidden because it is often overlooked. Now that we have established that all funds are borrowed, you have to look for the lowest cost of those funds and borrowing from yourself is usually the least expensive due to the low APR on savings. Get the idea? Invest on.