Stated Commission Does Not Belong in the Offer to Purchase or Sales Contract

Reblogger Cindy Jones
Real Estate Agent with Integrity Real Estate Group

 

Back when our market was hot in Northern Virginia I had a couple of agents present contracts asking for a "bonus" over the commission offered in the MLS.  It should have surprised me but it didn't. 

The commission is an agreement between brokerages and if the buyer's agent feels what is being offered in the MLS is not appropriate compensation then the time to bring it up is before you show the property not when you present a contract.

 

Original content by Charita Cadenhead

Stated Commission Does Not Belong in the Offer to Purchase or Sales Contract

I am of the opinion that unless otherwise noted in an agreement between buyers, sellers and their agents, the sales commission is between the seller, the listing agent and the selling agent (if different from the listing agent). Therefore, the I think it is tacky to include the following statement in an offer to purchase:

Seller to pay selling agent commission of XX% of sales price OR
Seller to pay selling agent $XX.XX.

Whenever I see this on an offer to purchase, the following questions immediately pops into my head:

  1. "okay, if the buyer really wants this house, will s/he reject the seller's counter because the seller is not willing to pay $xx.xx?
  2. did the buyer really ask the his/her agent to include that or did the buyer's agent say to the buyer, we should include that the seller is to pay $xx.xx to the buyer's agents or selling agent (if different from the listing agent?
  3. If the seller does not agree to the commission as outlined by buyer's agent, will buyer's agent interpret to the buyer that the seller rejected the buyer's offer to purchase?

Whenever I submit an offer for a buyer, I attach a separate document (a Commission Addendum) that states that the seller will pay $xx.xx or xx% as stated in the MLS listing agreement.  I sign it, the seller signs it and the listing agent signs it.  If an only if, my buyer is paying a portion of the commission, would I find it necessary to have the buyer sign it as well.  In either case, I don't feel that it should be a part of the "offer."

 Your thoughts please?

 

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Rainmaker
168,567
Larry Bergstrom
Crescent Realty, Inc. Spanaway, WA. - Spanaway, WA
CNE, CRS, GRI

Cindy, interesting. Our MLS (NWMLS) has a rule that precludes this type of business negotiation (sic) "unless it's discussed and agreed to before the offer."

There is nothing more professionally embarrassing then to present an offer that has a caveat of a higher selling commission.

Dec 28, 2010 08:00 PM #1
Rainmaker
424,571
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

Cindy, We have Buyer Agency as a law in Connecticut.  If the sales price is okay with the seller, and the buyer chooses to add monies to his purchase, to pay his agent, it is acceptable.  The buyer is really the one, who is paying his agent.  While I was at RE/MAX, we created a form to attach, as an addendum, to the purchase contract. All parties signed the addendum. Seller agency is no longer the only agency in our state.

Dec 28, 2010 08:01 PM #2
Rainmaker
439,539
Jim Patton
Century 21 M&M - 209-633-2839 - Turlock, CA
Realtor - Stanislaus & Merced county Realtor.

The commission paid does NOT belong anywhere on the purchase contract.  I agree with you 100% Cindy, the commission is an agreement between the seller and the sellers agent.

Dec 28, 2010 08:02 PM #3
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Gerry Michaels
Glasswork Media Arts - Gettysburg, PA
GettysburgGerry Social Meida

Cindy, I have had agents try and sneak a change to the commision by me. Increasing what is in the MLS. Here we go by what is in the listing,plain and simple, however I always check now, just avoid confusion.

Dec 28, 2010 08:03 PM #4
Rainmaker
769,536
Mike Jaquish
Realty Arts - Cary, NC
919-880-2769 Cary, NC, Real Estate

Cindy.

I think the most charitable way to describe this practice is "tacky."

Dec 28, 2010 08:27 PM #5
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Larry-I was taught early on that as your MLS says you negotiate the issue with commission in the MLS BEFORE you show the property.  Not afterward AND not on the contract.

Francis-we have buyer agency as well in Virginia. 

Jim-thank you for your comment.  Fortunately I haven't seen this in a while on an offer on one of my listings.

Gerry-Reading a contract all the way through means looking for every T&C a buyer or their agent may try to sneak in.

Mike-I would agree it is "tacky" and certainly wonder if there are brokers who try and teach their agents this trick.

 

Dec 29, 2010 09:51 AM #6
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Cindy Jones

Pentagon, Fort Belvoir & Quantico Real Estate News
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