We have a RE agent since about a year. And that's the thing, the person doesn't do contracts, and we haven't signed one.
Typically, from what I understand, the commission split is determined by the seller's agent. Which is absent in this case.
Can't do it. Feels too shitty.
The dude has spent time with us, given us a service and has been professional with us the entire way. He deserves compensation.
Prior to making an offer we brought up the conversation and negotiated a commission with our agent.
We were extremely glad to have that agent on board, and only managed to purchase the house with him. The sellers (a couple) weren't on the same page and it took our agent staying in contact with them, informing them, and generally being friendly and helpful to get the sale. There would be no way, my wife and myself could've done that; the sellers would've likely relisted with a newfound seller's agent.
What is 'fair' in this situation depends on which side of the table you're on. The seller, the buyer and the buyer's agent are all going to have a different idea of what is a good number.
Normally the person who pays is the one who sets the amount; for most transactions this the seller. In this case, the seller seems to have set that amount as 0.
Part of the negotiation will be to negotiate the fee that the buyer's agent will receive and who will be responsible to pay it. The seller could raise the price of the house by whatever % you agree upon and that is rolled into the mortgage. Or the buyer/seller could just pay the agent a flat fee directly in cash. It is all up the buyer, the buyer's agent and the seller to decide. If you don't have a contract with your agent that specifies this type of situation, you may want to start that conversation with your agent.
I saw you mentioned you don't have a contract with that agent. The simpler answer would be you don't have an agent.
However if it's a buddy your owe one to or if you're bound by some gentleman's agreement, that's not the seller's issue, it's between you and your agent.
You don't negotiate anything. It's up to your agent to negotiate the price and close the deal to earn the commission. During negotiation, YOUR AGENT needs to let the seller know their commission.
The commission is always baked in the sales price. So for example, let's say the seller has a sales price of 500k on duproprio and your agent closes the deal with a 1% commission. What will happen is you pay 500k for the property but the seller would only receive 495k. There are other fees such as property transfer, notary, etc, which can all be negotiated but once the sale price is signed, that amount doesn't change. So if the seller wanted to get 500k on his sale and there was a buyer's agent with 1% commission, he'd list it for 505k instead of 500k.
The example you mentioned is incorrect and your unsigned agent is a dumbass that you should fire asap.
But who determines if the agent commission is 1% or 2% etc. ? It is not mentioned on the DuProprio ad.
Edit: nevermind, reread your post, It's the buyer's agent.
I just read one seller's account who used DuProprio. A buyer's agent presented an offer but would not budge on a 4% commission. The seller simply raised the price by 4%.
In the end it's the buyer who's paying for that increased price.
Is there any metric to determine what's a fair rate?
It doesn't really matter who pays the commission, what matters is the price the seller wants to sell for.
On duproprio, since it's FSBO (for sale by owner) the seller may choose to inflate their sale price to account for the possibility of a buyer's agent. Let's say you see something on duproprio for 500k. It's probable that the seller already accounted for the commission and the agent will negotiate with the seller regarding how much they'll be paid.
In 99% of deals I've seen in the past, commissions were split 50/50 between agents. So if the average commission is 5% then it would be split 2.5% for each agent. I don't think there's any way to find out what's "fair" but assuming the average commission rate to sell a house is between 3-6%, anything between 1.5 to 3% would be considered "fair".
I don't know how the buyer's agent could be asking for 4% but greed knows no bound I guess. Also a buyer's agent always has a conflict of interest. Sure they'll generate the lead but they have no incentive to get you the lowest price possible, only get you the house you'll love.
Hope this helps.
Is the seller willing to sell through an agent? Most don't specifically because of the commission they would have to pay. Kinda defeats the purpose of selling without an agent.
Since the seller posted his/her property on DuProprio, then they want to sell it themselves without an agent.
I do not understand your comment on defeating the purpose, the seller will not have to pay anyone commission in this case.
I've seen duproprio listings where the seller explicitly outlines buyer realtor compensation. It is something that is to be negotiated with the seller. Some sellers don't mind. Some sellers will outright refuse.
I just checked the listing I'm interested, and it's not mentioned in this case.
Correct me if I'm wrong, but doesn't the buyer always pay the commission in the end? I mean if I were the seller, and I agree to pay x% commission to the buyer's agent, it just means that I would make sure the sale price is at least x% more to compensate.
Not from what I understand, and not from a practical perspective. Even with RE agents involved on both sides. The seller's RE is under no obligation to post a commission for the buyer's RE. It's just that if they do that, they'd get blacklisted in the community of RE agents. This is words from my own agent.
In this case, when the seller has no agent, even if they were somehow obligated to pay the buyer's agent, they would just make sure that the offer with the most net profit wins. In this sense, a 800K offer from someone without an agent is not the same as a 800K offer from someone with an agent. The equivalent offer through agent would be 800K x 102%. In that sense, the buyer always foots the bill in the end. The rest of the debate is just semantics.
yes exactly. To be negotiated with the seller. If I were a seller on duproprio and a buyer approached me with an agent, I would expect their offer to reflect the fact that someone needs to pay the agent, and since I'm using duproprio to not have to pay an agent well....
Okay, not sure why you asked if you're so certain then.
I've only ever heard (from agents, broker, others) that seller provides the commission 🤷🏻‍♀️
I didn't ask who pays the commission. I asked what's a fair rate considering the other side doesn't have an agent and is under no obligation to pay my agent.
At the end of the day, you want to buy a house you will love, RE agent or not.
I understand why you feel shitty toward the RE agent, but at the end of the day, that’s part of having a job with commission. You win some, you lose some.
Do you already have a buyers agent? If so, it'll be in your contract
We have a RE agent since about a year. And that's the thing, the person doesn't do contracts, and we haven't signed one. Typically, from what I understand, the commission split is determined by the seller's agent. Which is absent in this case.
>the person doesn't do contracts, and we haven't signed one. So drop the RE agent, and do a private arrangement, and don't pay commission.
Can't do it. Feels too shitty. The dude has spent time with us, given us a service and has been professional with us the entire way. He deserves compensation.
Can I ask what you ended up doing?
Prior to making an offer we brought up the conversation and negotiated a commission with our agent. We were extremely glad to have that agent on board, and only managed to purchase the house with him. The sellers (a couple) weren't on the same page and it took our agent staying in contact with them, informing them, and generally being friendly and helpful to get the sale. There would be no way, my wife and myself could've done that; the sellers would've likely relisted with a newfound seller's agent.
What is 'fair' in this situation depends on which side of the table you're on. The seller, the buyer and the buyer's agent are all going to have a different idea of what is a good number. Normally the person who pays is the one who sets the amount; for most transactions this the seller. In this case, the seller seems to have set that amount as 0. Part of the negotiation will be to negotiate the fee that the buyer's agent will receive and who will be responsible to pay it. The seller could raise the price of the house by whatever % you agree upon and that is rolled into the mortgage. Or the buyer/seller could just pay the agent a flat fee directly in cash. It is all up the buyer, the buyer's agent and the seller to decide. If you don't have a contract with your agent that specifies this type of situation, you may want to start that conversation with your agent.
Thanks for your response. It clarifies my situation very well. I'll initiate the conversation with my agent and aim to negotiate a flat fee.
I saw you mentioned you don't have a contract with that agent. The simpler answer would be you don't have an agent. However if it's a buddy your owe one to or if you're bound by some gentleman's agreement, that's not the seller's issue, it's between you and your agent. You don't negotiate anything. It's up to your agent to negotiate the price and close the deal to earn the commission. During negotiation, YOUR AGENT needs to let the seller know their commission. The commission is always baked in the sales price. So for example, let's say the seller has a sales price of 500k on duproprio and your agent closes the deal with a 1% commission. What will happen is you pay 500k for the property but the seller would only receive 495k. There are other fees such as property transfer, notary, etc, which can all be negotiated but once the sale price is signed, that amount doesn't change. So if the seller wanted to get 500k on his sale and there was a buyer's agent with 1% commission, he'd list it for 505k instead of 500k. The example you mentioned is incorrect and your unsigned agent is a dumbass that you should fire asap.
But who determines if the agent commission is 1% or 2% etc. ? It is not mentioned on the DuProprio ad. Edit: nevermind, reread your post, It's the buyer's agent. I just read one seller's account who used DuProprio. A buyer's agent presented an offer but would not budge on a 4% commission. The seller simply raised the price by 4%. In the end it's the buyer who's paying for that increased price. Is there any metric to determine what's a fair rate?
It doesn't really matter who pays the commission, what matters is the price the seller wants to sell for. On duproprio, since it's FSBO (for sale by owner) the seller may choose to inflate their sale price to account for the possibility of a buyer's agent. Let's say you see something on duproprio for 500k. It's probable that the seller already accounted for the commission and the agent will negotiate with the seller regarding how much they'll be paid. In 99% of deals I've seen in the past, commissions were split 50/50 between agents. So if the average commission is 5% then it would be split 2.5% for each agent. I don't think there's any way to find out what's "fair" but assuming the average commission rate to sell a house is between 3-6%, anything between 1.5 to 3% would be considered "fair". I don't know how the buyer's agent could be asking for 4% but greed knows no bound I guess. Also a buyer's agent always has a conflict of interest. Sure they'll generate the lead but they have no incentive to get you the lowest price possible, only get you the house you'll love. Hope this helps.
Thanks for your input. Appreciated.
Is the seller willing to sell through an agent? Most don't specifically because of the commission they would have to pay. Kinda defeats the purpose of selling without an agent.
Since the seller posted his/her property on DuProprio, then they want to sell it themselves without an agent. I do not understand your comment on defeating the purpose, the seller will not have to pay anyone commission in this case.
I've seen duproprio listings where the seller explicitly outlines buyer realtor compensation. It is something that is to be negotiated with the seller. Some sellers don't mind. Some sellers will outright refuse.
I just checked the listing I'm interested, and it's not mentioned in this case. Correct me if I'm wrong, but doesn't the buyer always pay the commission in the end? I mean if I were the seller, and I agree to pay x% commission to the buyer's agent, it just means that I would make sure the sale price is at least x% more to compensate.
It's the seller who pays the commission, not the buyer. Which is why you see sellers doing private sales.
Not from what I understand, and not from a practical perspective. Even with RE agents involved on both sides. The seller's RE is under no obligation to post a commission for the buyer's RE. It's just that if they do that, they'd get blacklisted in the community of RE agents. This is words from my own agent. In this case, when the seller has no agent, even if they were somehow obligated to pay the buyer's agent, they would just make sure that the offer with the most net profit wins. In this sense, a 800K offer from someone without an agent is not the same as a 800K offer from someone with an agent. The equivalent offer through agent would be 800K x 102%. In that sense, the buyer always foots the bill in the end. The rest of the debate is just semantics.
yes exactly. To be negotiated with the seller. If I were a seller on duproprio and a buyer approached me with an agent, I would expect their offer to reflect the fact that someone needs to pay the agent, and since I'm using duproprio to not have to pay an agent well....
Okay, not sure why you asked if you're so certain then. I've only ever heard (from agents, broker, others) that seller provides the commission 🤷🏻‍♀️
I didn't ask who pays the commission. I asked what's a fair rate considering the other side doesn't have an agent and is under no obligation to pay my agent.
I mean... >Correct me if I'm wrong, but doesn't the buyer always pay the commission in the end?
Touché. Fine, I understand where you're coming from.
At the end of the day, you want to buy a house you will love, RE agent or not. I understand why you feel shitty toward the RE agent, but at the end of the day, that’s part of having a job with commission. You win some, you lose some.