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Is Additional Commission To The Buyer Broker A Buyer Closing Cost?!!
A recent question in the Active Rain Q&A by Lynnea Miller sparked this post.
 
To borrow the words of my friend here in the 'Rain - Michael Jacobs:
 
 
It depends!
 
On which state you are in!
 
Physically that is - not mentally!
 
 
In Arizona - it is not - at least not as far as the Buyer being able to use Seller Concessions /  Contribution to Closing Costs towards additional commission to the Buyer Broker.  It is already documented in the current boilerplate AAR contract - this from the folks at AAR legal:
 
Commission Is Not a”Closing Cost” under Section 2(j) of the Contract
Pursuant to lines 77 and 78 of the AAR Residential Resale Real Estate Purchase Contract (the “Contract”), the seller agreed to credit up to 3% of the purchase price towards the buyer’s closing costs. The broker, who represents the seller, just received an Estimated HUD-1 Settlement Statement from the title company, which provides that a portion of that seller concession will be applied toward payment of the commission to the buyer’s broker pursuant to a separate buyer-broker agreement.
ISSUE:
Are commissions paid pursuant to a buyer-broker agreement properly included as a seller concession under Section 2(j) the Contract?
ANSWER:
No.
DISCUSSION:
Lines 77 and 78, when negotiated by the parties, obligate ... more

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