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Suggested Brokerage Commission?

Posted by c9pilot (My Page) on
Mon, Apr 27, 09 at 12:41

Short version:
Our long-term (12-yr) tenant signed a Buyer's Agent agreement with his next-door neighbor. She approached us via phonecon and email to see if we were interested in selling to tenant and sent us a packet of paperwork to justify her comp on the townhouse. At first we weren't ready to sell, needed more time to think about it, but after chewing on it for a couple of weeks (her vacation, tenant work travel, then readdress the issue), we decided that we were ready. She sent us an offer last week to which we are working on a counter-offer.

She's asking for 3.5% which I think is outrageous. She's saying that's her 3% buyer's agent plus .5% "listing" agent.

A local realtor friend (turned out to be from the same brokerage in MD) says to offer her 1.5% (or up to 2% max) and that she had done a similar transaction for .5% plus admin fees. My mentor realtor said 2 or 2.5% (in FL though). This is a transaction in the $300K range.

What do you think? Is 2% fair?
(Darn we wish our tenant would've just asked us straight - we've been expecting him to offer to buy the place for YEARS and now we're stuck with a commission on top of some ridiculous 7.5% MD non-resident tax and capital gains to boot!)


Follow-Up Postings:

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RE: Suggested Brokerage Commission?

"She's asking for 3.5% which I think is outrageous."

If it sells, it looks like a bargain to me in todays RE environment.


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RE: Suggested Brokerage Commission?

You are saving 2.5% if you were to list it with an agent.
Offer her 3.0%... she will take it, do all the work on both sides, and you get a hassle free sale.


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RE: Suggested Brokerage Commission?

Curious? If you did not hire this RE agent, why are you paying any commission. If the tenent wanted to buy the place, why did they not just come out and ask--or are they getting a kick back from the agent. I personally would be upset. Could you sell it yourself, go thru an attorney maybe cheaper?
Just curious.


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RE: Suggested Brokerage Commission?

I agree with offering her 1.5%, then negotiating up to 2 or 2.5%.
I think your tenant is trying to help a friend or himself with the kick back. You aren't desperate to sell, the agent is fortunate to have a buyer and a seller matched already.
Of course the agents on this forum suggest keeping the commission high. LOL


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RE: Suggested Brokerage Commission?

"Of course the agents on this forum suggest keeping the commission high. LOL"

High? Where are you living? 3.5% of $50k is nothing, considering the work and liability.


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RE: Suggested Brokerage Commission?

"3.5% of $50k is nothing, considering the work and liability. "

The OP said this is in the $300K range.


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RE: Suggested Brokerage Commission?

what do you care what the commission is.
You should focus on the dollars you will recieve in the offer (net of commision) and negotiate until that is an acceptable figure.


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RE: Suggested Brokerage Commission?;;

Why should I care about the commission? Because it is coming out of the sale of the house.. It is MY money, not the buyers or agents, The seller already has to pay capital gains and that is a big amount. I went thru this when I sold a rental and it was not fun to loose that much money. The agent was not hired by the seller and apparently is doing nothing for the seller an RE attorney could probably do for less.


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RE: Suggested Brokerage Commission???

Maybe if things get sticky, seller could put it on the market with a different broker and get more??


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RE: Suggested Brokerage Commission?

The buyer has engaged the agent;
there's a reason.

The agent represents the buyer plus has to do the paperwork & communication that a seller's agent would ordinarily do.

& the buyer is paying the fee;
it's included in the contract offer.

As someone said above, the buyer has structured the offer to suit his/her/their needs-

the bottom line is the only thing that affects the seller.

If you are happy with your estimated net, accept the offer.

If not, counter.


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RE: Suggested Brokerage Commission?

""3.5% of $50k is nothing, considering the work and liability. "
The OP said this is in the $300K range."

The % probably should be more at the $300k range.
Since when and where are buyers paying their agents commission? Some people really don't understand how the RE business works.
I'll start with:" What does co-op mean in a real estate transaction"?


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RE: Suggested Brokerage Commission?

The buyer pays everything.

When the contract is worded that the seller is paying an amount toward the buyer's closing, the seller is paying it out of funds that the buyer pays him/her;
if the buyer were paying the closing in cash, the sales price would be lower, so the buyer is actually including the closing in the purchase amount & paying it out over the term of the loan.

"Co-op" refers to a transaction in which the seller's agent agrees to divide his/her commission with the buyer's agent.
This buyer has engaged an agent & the seller has not, so I don't know where "co-op" would come in.


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RE: Suggested Brokerage Commission?

Update:
We did our "net" calculations and offered 2.5%, which the buyer accepted with the other terms of our counter-offer.

Since it is a buyer's market, our tenant apparently has decided that it's time to buy and has been looking at several homes, some of which are very attractively priced, to our detriment. If we pushed the sales price too high, he'd just buy the completely updated and larger townhouse five down from ours. But he obviously liked our home because he did live in it for 12 years and wouldn't have to move, our is end unit, significantly better view, better boat slip, etc. So we had a little bargaining power.

But if we didn't sell to him, we wouldn't be listing at all and definitely not with this agent. We'd fix the water leak in the basement, repaint and put it back on the rental market. So it's not realistic to compare what commission we'd pay if we had listed. The point was that there was very little work put into this on the part of the agent but she should be compensated for some - the question was how much? I think we are being generous.

This works out for us because this is our last out-of-state rental and long-distance management is a pain in the behind.


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RE: Suggested Brokerage Commission?

"Update:
We did our "net" calculations and offered 2.5%, which the buyer accepted with the other terms of our counter-offer."

Congrats C9, get it closed.

""Co-op" refers to a transaction in which the seller's agent agrees to divide his/her commission with the buyer's agent.
This buyer has engaged an agent & the seller has not, so I don't know where "co-op" would come in."

The listing agent works for the seller and gets paid by the seller. The listing agent offers to co-op his fee with other agents who bring a buyer and close the purchase. The amount of the co-op fee offered is spelled out in the MLS.
The buyer does not pay their agent or the listing agent. The seller does and the amounts paid to the agents by the seller are reflected on the sellers HUD 1.

Any closing cost paid by the seller for the benefit of the buyer, comes out of the sellers equity.
Unless the purchase price is increased to cover the sellers expense, in affect having the buyer finance his closing cost, the seller pays.


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