Should Repair Credits Dent Commissions?

By
Real Estate Agent with RE/MAX Select NJ# 9483506

I am curious how tohers handle this.  We negotiate a commission structure when we take a listing, or rely on a published commission when we show a property.

A sale is contracted at, say $1,000,000, meaning the agents managed to lead all parties to agree on a $500,000 sale price.

Inspections reveal $25,000 worth of work the seller should have and could have done during ownership, but deferred.  Buyer and seller agree to a credit in lieu of repairs, due to time constraints and possibly buyer's desire to control quality of repairs. 

But the banks don't want to see repair credits on settlement statements.  They want repairs done or price reduced.

to varying degrees I have a bunch of these about to close.  I am inclined to bill commission based on the original agreed sale price.  (I didn't participate in the decision to defer repairs, nor will I participate in the spending of the credit.)  I anticipate pushback from the attorneys even before the sellers.

Please tell me your philosophy, practices and experiences with this issue.  I appreciate your wise feedback!

 

Comments (1)

TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

In my opinion you are talking about pennies and I would focus more on keeping and building relationships even if the relationship is with a bank.  Years go by and we tend to run into people and remember the deals that we made years back.  It is very rare for a seller to ever bring this up as a negotiating point.  If he asks the question where do we base commissions, my typical response is that it is always on the contract price.  That works 99% of the time.  If you decide to work with them, then a listing addendum needs to be made up to reflect the changes.  Be very sure that you also have this in writing with the buyer's agent as most MLS are agreements between brokers and you can agree to whatever you want, but the buyer's broker may force what is put on the MLS by the selling broker.  Understanding the can of worms that this can cause, just reply with a quick short confident answer.  It is not what you say, but how you say it that will have the affect.

Jul 21, 2009 05:18 AM