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I dont like the commission so......I will add an increased commission to the offer!

By Christopher Walker

Real Estate Broker/Owner with Mission Grove Realty Inc.

December 23, 2006 08:20 AM

Here is one that we have had twice in the past 6 months:

An offer comes in. It all looks good yet, a line item in the purchase contract states "Commission to Buyers Agent to be 5%".

Call me a loon but, since when does the buyer care what commission is paid to their agent?

In this instance, the offer was written at more than the asking price. I imagine that the agent convinces the buyer to pay more so that he could get more commission...?

For those of you that don't know: Standard of Practice 16-16 of the Code of Ethics of the National Association of REALTORS®, and Rule 9.5 of the California Model MLS Rules, generally state that a cooperating broker shall not use the terms of an offer to purchase to attempt to modify the listing broker's offer of compensation nor make the submission of an executed offer to purchase contingent on the listing broker's agreement to modify the offer of compensation.)

Have any others out there been experiencing this?

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Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Hey Chris, I have had this happen several times in the past. Sometimes the seller agreed and sometimes they didn't.

The COE clearly states a Realtor can not use the contract to alter the commission being offered. However, the Buyer can. The Buyer can request in the purchase offer that his Realtor is compensated a different amount than what is being offered in the MLS. This is one of the advantages of having a Buyer's Broker Agreement. In a BBA the Buyer is guaranteeing his agent a minimum commission. The Buyer is well within his rights to ask the Seller to make up the difference between what is being offered and what he has guaranteed his agent. It now becomes a point of negotiations between the Buyer and the Seller. Perfectly legal and perfectly ethical.

Dec 23, 2006 08:34 AM

Christopher Walker

Mission Grove Realty Inc. - Hemet, CA

Local Broker and Realtor - Hemet & San Jacinto, CA

Bryant: Good point. In the intances that we have experienced, it did not seem to be the case but, I can see where it would make sense. Thanks for your input.

Dec 23, 2006 08:49 AM

Eric Bouler

Gardner Realtors, Licensed in La. - New Orleans, LA

Listening to your Needs

I feel like doing it when the commission is less than 2%. I feel its wrong because you are not working in your clients interest. That money could go to him as additional savings. The seller is interested in the net.

Dec 23, 2006 11:19 AM

Leigh Brown

Leigh Brown & Associates, RE/MAX Executive - Charlotte, NC

CEO, Dream Maker - Charlotte, NC

In NC you can't have anything at all in the contract related to compensation. We have a separate form for confirmation of agency relationship and offered compensation. That's where I've tried to negotiate better rates for myself, but only on houses that are not offering what I would consider to be fair in current market conditions.

Dec 23, 2006 12:09 PM

Randy L. Prothero

eXp Realty - Hollister, MO

Missouri REALTOR, (808) 384-5645

In Hawaii we have a seperate cooperating brokers agreement to address commissions, but that does not stop someone for adding a provision to the DROA. I have seen it once or twice.

We countered an offer earlier in the year to remove the extra commission added by a buyers agent. I would have loved to be a little birdy on the wall when the agent had to explain that one to his client. What a turkey.

Dec 23, 2006 05:19 PM

Rich Kruse

Gryphon USA, Ltd. - Columbus, OH

What i see quite often are offers with significant overages for repairs. It is not uncommon to negotiate the agent not being paid on the over. For example $150,000 with $25,000 reabated to the buyer. Agent gets paid on the $125,000, not the whole.

Dec 23, 2006 11:53 PM

I dont like the commission so......I will add an increased commission to the offer!

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