Nate, I’m sorry, but I did get what the seller did that was in bad faith. You are correct that agent was unprofessional, and that was just the half of it. That was the 2nd time I had a bad experience with that Broker.
But, a seller doesn’t have to take the highest offer or any offer for that matter. I used to be under the wrong assumption that if you offered their asking price they had to take it, but they don’t.
This is correct. When selling some of our investment real estate, we have on a few occasions taken a slightly lower offer to put it in the hands of young families instead of hedge funds.
Ok, thanks for the info. That’s a good idea.
Without getting into the legalese weeds, and in most US RE markets, listing contracts are the legal instrument which binds the agent to the Seller as the Seller’s fiduciary. An exclusive Buyer’s agent contract binds the named Agent to the buyer as the Buyer’s fiduciary. Those contracts, if used, are normally in place before an offer to purchase comes into play. The Seller is not a party or signatory to the Exclusive Buyer’s contract and the Buyer is not a signatory to the Exclusive Listing (read Seller’s) contract.
After a Buyer who has engaged an agent through an Exclusive Buyer’s contract, that Buyer’s Agent, at the direction of the Buyer, may write an Offer to Purchase and deliver it directly to the Seller, if the property is not listed, or to the Seller’s Agent if the property is listed.
The signatories to the offer to purchase are typically the Buyer, the Seller and, in most cases, any Agents involved. When signed and agreed to by all principal parties they are bound to the promised performance(s) defined by the contract. The contract also would normally state the fiduciary roles of any Agents involved.
An Exclusive Buyer’s Agent Agreement does not bind the Seller in any way, any agreement between the Seller and the Buyer’s agent is usually addressed in the Offer to Purchase.
It is impossible for an Agent to be a Fiduciary to both the Buyer and Seller of real property. A Duel Agent is bound by the legal theory of “fairness to both parties equally,” and is not a Fiduciary to either one.
I agree with you 100%. Basically my simplified way was trying to say the same thing. So, if the seller requested a change in the offer prior to signing it, that agent should make that change. The same would go for the Buyer’s agent, except the seller doesn’t have to accept the amendment. Once it’s signed it’s a binding agreement and can only be changed by mutual agreement. What I previously referred to was in absence of an exclusive Buyer’s agreement the buyer’s agent, if not contracted otherwise, technically still represents or is obligated to the seller in GA, or it used to be that way. A weird kinda deal, I guess because the seller paid the commission and the two agents shared it. I’m not sure why, but I was told that by a RE investor one time. Thanks
Can a buyer ever pay the sellers commission?
Maybe you are able to put more than 20% down, believe the home will appraise and would be ok with dropping the offer price in exchange for paying the brokerage commission and other fees of sale
For instance, you offer $500,000 on a house. Let’s say the brokerage commission is 2.375% for the buyer and 2.375% for the seller or $23,750. Other costs of sale are $2,500 thus net proceeds of a $500k home is $473,750 or $500,000 - $26,250.
Could you offer $475,000 and it be more attractive as you will pay all costs thus netting the seller $475,000
Are they still waiting? How are you holding up?
Yes, Buyer can pay anything, I believe.
Regardless of what the NAR wants you to believe, this is happening now. The commissions are passed on to the buyer via an inflated price and then deducted from the sales proceeds…
Its no different than a business passing along their labor costs and taxes to their consumers.
In AK, WA and ID the Seller who lists a real property with a licensed agent, is not, other than the duty of honest dealing, obligated to the Buyer’s Agent. It may be the law, or it may be the local practice, but it is how business in most states takes place. Due to the recent happenings, that situation will probably change in the foreseeable future.
The Buyer’s Agent’s commission money, if any is offered, is promised by the Listing Agent. The Seller, in agreeing to, and signing the listing agreement, commits to a defined percentage or specific amount of commission money to be paid to the Listing Agent only. The agent-version of the listing detail will typically include the commission offered to the Buyer’s Agent. The Seller may or may not be aware of how the commission they agreed to pay the Listing Agent is split, it is a deal between the Listing Broker and the Buyer’s Broker or Agent.
The Buyer’s Agent will typically write the offer to purchase the listed property contingent upon the Selling Agent agreeing to pay the Listing Agent a specific amount or share of the commission the Listing Agent receives at closing. If the Selling Agent fails to make the offer contingent on the Selling Agent receiving a commission from the Listing Agent they may not get paid a selling commission. The exception to that would be a Buyer’s Agent who has obligated the Buyer to pay a commission in the absence of a commission paid by the Seller or Seller’s Agent.
The exception being a Buyer signing an Exclusive Buyer’s Agreement which states otherwise. You’ve probably had offers on properties you own and are selling via FSBO where a Buyer’s Agent makes an offer subject to you, or the Buyer, paying the agent a commission.
Most people willing to sign an Exclusive Buyer’s Agreement are first-time buyers new to the real estate ownership/buying experience.
In my 12 years, (1998-2011) in the RE business I never had a client sign an Exclusive Buyer’s Agent agreement. Most reputable RE Agents in the markets I worked in did the same.
Some team big operations hired newby RE agents and started them out as “buyer’s agents” and they would use 90-day exclusive buyer contracts to hang on to buyers unfortunate enough to have chosen them to begin their first home-buying experience.
Certainly we pay a commission to the Buyers agent if they are involved in one of our transactions…but the buyer pays a higher price because of it.
Thanks for the info. That sounds correct and reasonable. Commissions have gone down quite a bit. 6-7% just to list is a bit much. It may be good if the listing agent works to sell it, but it seems, at least in my cases, that they list it and let others sell it. Now days you can get it listed on MLS for <1%. I had one listed one time for a flat $500 and sold it myself. It’s a lot of work though. Last time I sold one I paid the agent >$13k just for a listing and few nice pictures. She never showed my house once. But, the pictures were nice. Not $10k worth, but nice. Thanks.
Here’s the kind of web presence a good agent gives a listing in today’s market:
Her job is to get your house sold. The best people for her to show the house to are other agents, you do that via in-person agent open house events or web-based photos or video, preferably with immersive on-line tours.
She can’t represent your interests exclusively while representing a Buyer.
I understand, the reason I picked her was that she claimed to have buyers in waiting and contacts from out of town and listed a lot of homes in the area. I found out later that she actually sold few of her listings. Bottom line I could have gotten that kind of service for $10k less. She spent more time trying to sell us a new house than sell mine from what I could see. I didn’t do enough checking on her before. I would have found out she’d been fired by a number of people. She was too aggressive with my wife to buy a house that she was demanding that we buy houses she claims to have found, when we found them ourselves. It was a nightmare. But, I understand your point. And, that was a nice listing you posted. Thanks.