"Is it customary for the buyer to pay the full 6%? "

Buyers do not normally pay any commission, sellers pay.

We have bought 3 foreclosures in the past 5 years, and the realtors got their full commission from the seller.

I suspect what she was hinting at was that foreclosures were more work so she would be earning less for her time.

I work in a RE office and it seems that some foreclosures do take quite a bit more time/paperwork/stress than other foreclosures, but not nearly as much as short sales! I have also found that the banks are paying "standard" commission rates on foreclosures, but short sales are much more iffy.

I'm buying a short sale right now and the listing agent can't guaranty a percentage, except saying whatever he gets will be split 50%/50%.

Maybe your realtor is hinting for more money that she will get from the seller and you need a new realtor. Not every sale is easy even the non foreclosures etc. Sounds like she doesn't want to work.

I don't think the issue the amount of work that buying a foreclosure is. Realtors deal with that quite frequently, especially in Florida. It's the amount of work that Jane is. She doesn't really want to live in Florida and makes sure that won't happen. She's already worn out 3 realtors. This is the 4th. There won't be any left soon that will work for her without a substantial fee up front. Sounds like this one is hinting in that direction already.

Hollysprings, a bit rude, aren't you? I actually do want to live in Florida and intend to. Just having a hard time finding a house we like. Unless you know our circumstances, I think it best to keep a handle on your opinions.

Back to topic, we adore our Realtor and have told her we want to make sure she gets paid her full commission.

I was just wondering if there was some difference between straight sales and foreclosed sales?

This has been a difficult time for us with nowhere to get advice, except here. Most people have been kind. Lately, not so much.

Thank you for the information,

Jane

Some lenders add their own addendum to the contract, including language that says that, in the event of a conflict between the addendum & any other document (contract or listing agreement), their addendum applies.

& their addendum often reduces commission.

Short sales are sometimes worse;
the sale is completely dependent upon the lender's agreement to take less than is owed on the note, & the lender sometimes springs a "surprise" at the last moment, changing prices & concessions & reducing commission right before closing.

It sounds to me like your Realtor has been through these things before & wants you to be prepared.

The lender has staff working hard to get the highest price & to beat the expenses down as low as possible;
your Realtor is working for you & is entitled to get paid as you & (s)he agreed.

If the foreclosed property is listed with a broker, isn't there an listing agreement in place which explains the commission rate? How can the bank change while the listing is in effect?

If the bank is selling the property as a FSBO, then wouldn't the real estate agent have the bank sign a listing agreement before she introduced her buyer? Again how could the bank change the rate at the time of closing?

How much extra work does the buyer's agent need to do with a foreclosure property? Shouldn't a real estate lawyer be involved in this transaction?

The listing Realtor puts a disclaimer in the narrative in MLS, something like "Actual commission to be split between brokers 50/50".

If not for that disclaimer, I'd think a buyer's agent could claim the amount shown in MLS by the listing agent, regardless of whether the listing agent actually received that amount.

The buyer could pay his/her agent the difference at closing.

I haven't heard of a lender selling FSBO for at least 20 years; the banks don't want to pay Realtors, but they do want them to sell properties.

Foreclosed properties & short sales are indeed headaches involving at least twice the work & stress (arbitrary deadlines, documentation demanded by lender, reading every word of those addenda & explaining it to the buyer, dealing with title companies chosen by the lender for their cut-rate prices & not for their effieiency or manners or cooperativeness, etc).

I would never discourage a buyer from conferring with a real estate lawyer.

"The buyer could pay his/her agent the difference at closing."

What does this statement mean?

Isn't it standard practice to split the commission between the brokers and agents?

Why would a bank have an arbitrary deadline for a foreclosure? Isn't the goal to sell the property as quickly as possible? Don't lenders demand documentation when they grant a mortgage?

No doubt there are extra items which must be done for a foreclosure sale, but I would be disappointed to hear a realtor say this is too much work and not worth the commission. How many extra hours of work could it be?

The commission for a foreclosure is agreed upon between the lender and the listing agent before it is advertised in the MLS. Once that amount is advertised in the MLS, the buyers agent commission can not be lowered by the bank. After all, they are a part of the transaction from start to finish.
Short sales are a whole 'nother matter. Because the lender is not involved in a short sale until there is a written contract in front of them, they sometimes do change the commission rate that was agreed upon by the listing agent and the homeowner. This is why listing agents generally put verbage in the MLS remarks that if the commission is reduced, it shall be split 50/50.
Sylvia, are you certain that foreclosure commissions can be reduced at the last minute? I have never heard of this.

Thanks for the info. I don't have the details of the agency handling this. It is located in Texas and only takes bids on line. It is not handled by the bank but an agency.

Our Realtor did not say she didn't want to handle the sale, she mentioned it is complicated and she disliked doing the bidding online, not having a contact person. The bids get placed and you wait. Payment to the Realtors can be lower. She never said she wouldn't handle it.

We assured her she would get her full commission if we decided to go ahead with an offer.

Thanks again,
Jane

Jane, are you talking about homepath or homesteps? There's plenty of info on their websites if you look around. In many cases they actually pay an additional bonus to the successful agent.

"We assured her she would get her full commission if we decided to go ahead with an offer. "

Since you are not he seller how do you propose to do this?

Pay her yourself?

How do you determine what "full" commission is?

"How do you determine what "full" commission is?"

I'm sure what's customary for the location. Like the percentage here is 0.2% different from Denver.

And what is the broker-agent split?

Sorry, you're right nyreguy, it's on short sales only that the bank can surprise sellers, buyers, & Realtors.

The buyer's representation agreement is the "mirror" of the listing agreement;
among other things, it spells out what the buyer's agent's commission is to be.

& yes, buyers (especially buyers of commercial or investment property) can & often do pay their agents directly.

What is so bad about submitting a bid on line? This seems like less work than doing it in person. When you submit a bid don't you always have to wait regardless whether it is in person or on line?

Aren't all commissions negotiated between the listing broker and the owner? I think the standard rate is 6%, but aren't there instances where the rate is lower?

Denver has most listings showing: 3.2% Listing Broker, 2.8% Buyers Agent.

If it's a short sale, the lender has to agree to accept proceeds of sale instead of the full amount due on the loan;
therefore, the lender, although not a party to the listing agreement, can refuse to pay the amount agreed between listing agent & homeowner.

The "standard amount" doesn't pertain, & neither does the agent/broker split;
the buyer's broker gets paid according to the buyer's rep agreement, & the internal split is between the agent & his/her broker;
you cannot pay an agent "on the side", the commission has to go through the sponsoring broker.

Although I've done online submissions & don't care one way or another, online submissions direct to the lender are very "detached", leaving the listing agent out of the process, & the listing agent is the only person or office that a buyer's agent can talk to;
if the house has flooded/burned/been hit by a tornado since the lender did the appraisal, the lender very likely is still lookin at the appraisal they had done before the flood/fire/tornado hit.

Customary commission is 6 percent 3/3. I don't have any further details as we haven't decided whether to proceed with this sale. It is a condo and our Realtor is trying to help get the financials on the condo.

There are some problems with the place and she is trying to get more information before we make an offer.

She will get paid, but possibly not her full commission. There is some wording in the paperwork which states a lower commission. I think it was 4%, but I'm not certain.

Yes, Brickeye, we would pay the difference, if necessary.

Thank you Sylvia. It is a bank-owned property and has been listed for 3 months without an offer (as far as she can tell on-line.) My husband is not thrilled about taking on this property, as it will need a lot of work. I love the potential and the location.

Jane

If it is a bank owned property, then your agent already knows what commission she is going to get. If it is a short sale, she does not fully know what commission she will get until the end of the transaction.
I personally find it tacky and unprofessional to bring up my compensation to my buyers, especially hinting to them that the transaction will be more work and less pay.

I agree with NCREGUY, the agent sees commission details in all her listings, why bring it up to you.
Some sales are great commission, fast and easy, others not so much, some really bad, but if you are not the problem, it is just part of her job and I don't think it should be mentioned to you.
She is there to work for you, I understand if there is a different commission arrangement, but this appears to be an REO on the MLS.

It is your choice, you say you love her and want to pay her more, go for it.

I do, and I also don't want her to avoid showing us houses which might have a lower commission. She deserves to get paid for her work.

Jane

I personally think that it would make more sense if buyers paid buyer's agents directly, since they're the ones benefiting from their expertise and assistance. It would avoid the situation where agents would push/not push or show/not show houses based on the seller's commission offered. BIG (potential) conflict of interest. It would incentivize buyer's agents to seek out beyond the MLS if needed, and find FSBOs or even properties not on the market to help their buyers.

Just one more of the things I'd change about the world if I ran things. :-)

With a short sale, the agent may not know what commission the owner will be allowed to pay until very late in the day, but the fee to which she is entitled is determined by her agreement with her clients.

I would always let my clients know if I had doubts that the seller would pay my fee, so the client would be able to use that knowledge when deciding what to offer, etc.

I always talk to my clients about my fee, how much it is, when I've earned it, where it "comes from" (a case can be made that the buyer actually pays all fees, since the money the seller uses to "pay" comes from the buyer's money), how we handle FSBOs, etc.

This is not a short sale, nor a FSBO.

We are discussing a REO in the MLS.

Sylviatexas wrote:
"I would always let my clients know if I had doubts that the seller would pay my fee, so the client would be able to use that knowledge when deciding what to offer, etc."

I am confused about this statement... can you elaborate? What does your commission have to do with what the buyer should offer?

I agree with Weedyacres. Makes more sense.
Sylvia, you sound like a honest, upfront Realtor. This is a bank-owned townhouse. We have decided to not consider it.

Jane

Why would you not consider a bank owned property if it meets your needs?

If seller will not pay the fee on which my buyer client & I have agreed, buyer may wish to offer a lower amount to allow for the difference.

Gotcha.
I do not make my buyers sign a form that says they will make up any shortfall in my commission. I'll take my 2.5% paychecks as well as the 3.0% paychecks.

Nc, we are considering bank owned, that's what I was posting about. There are a number of reasons my husband does not want to go forward with this house. I like it and it does offer a lot of things we have been looking for.

We both like to garden and I grow orchids. This townhouse has very little outdoor property and only has windows facing north and south. The southern windows are shaded by an attached porch. The house is dark. We considered adding skylights to brighten the inside, but skylights do not provide enough light to grow orchids.

Seems silly to walk away from a house because of light, but it is important to us. We had a contractor come to see if the roof over the lani (porch) could be removed and screened. The condo association stated we would have to submit drawn plans from by an architect, to their planning board. No guarantee that it would pass and it can't be submitted unless we own the house.

So we decided to move on.

Jane

Remember that orchids prefer some shade as opposed to high light. After all, they grow naturally in the understory of jungle canopies. Before becoming a REA, I was in the horticulture profession on the wholesale side of it.
I was surprised to hear that you were now looking at condos, as opposed to the SFHs that you were looking at last month. Most buyers at this stage have decided on one type of home or the other.

>The condo association stated we would have to submit drawn plans from by an architect, to their planning board. No guarantee that it would pass and it can't be submitted unless we own the house.

Just FYI, it's extremely unusual for any association in FL to allow additional holes in the structure of any building covered by a master windstorm policy, as most condos/townhouses are. If you are considering townhouses, i would only consider ones where you don't aim to do things like skylights--very unlikely to get approval.

Nc, we didn't know it was a condo, neither did our Realtor. We had revisited it a few times before we found it. Our agent called 'someone' to ask about the deed restrictions and HOA in reference to removing the roof. That was when she found out it was a condo. These units are attached but have over 2,400 sq ft. We thought they were single family homes.

I have grown orchids for at least 20 years. I know the light situation. Many orchids - Cattleyas, denrobiums, Vandas need high light. Many grow on rock ledges, hillsides and on decidiuous trees.

This lanai was so dark, you'd have trouble growing moss. As far as prefering condo vs SFH, we really prefer a SFH, but at this point we're looking at everything - if it offers both.
Jane

Sounds like you know more than I do concerning orchids. I will stick with RE.
I am very surprised that your agent did not realize the property was a condo. After all, condos are separated in the MLS from SFHs. She would have had to manually clicked on condos/townhomes for it to have come up.

NC, that would depend on how the MLS system is set up. In the MLS in my area, if you just click on "Residential" without narrowing it down to a subtype you will get every type of residential listing. Though I think that the common walls would be a tip off.

When we sold our house in NY, my husband was still working. We rented a townhouse, in NY, for 1 1/2 yrs until he retired. These townhouses were attached but were not condos. They were SFH. They had a HOA which was privately run by the tenants to pay for snow plowing and lawn maintance. Everyone was responsible for their own houses, roofs, driveways, etc. You could plant and do whatever you wanted with your house. Some people put on decks, patios, etc. There was no one in charge of anything, just the common costs which were always voted on by the residents. No Board of Directors. As a result, there was squabbling and arguments, but things eventually got done.

We found it confusing as we thought they were condos. When we saw the townhouse here, we just assumed it was the same thing. Apparently our Realtor knew, but didn't explain it to us until we tried to make changes to the house.

Jane