Commission based AFTER seller concessions

Mary,

Commissions based after concessions is a recent topic in my area with all the bank-owned homes on the market. Our MLS does not address the issue other than the commission advertised is a percentage of the sale price (not net price).

What has happened is the listing agent will send over a commission agreement to the buyer's agent after the sales contract is accepted (I just had one come over unexpectedly with the disclosure packet - it's usually mentioned first).  According to MLS rules, I do not have to agree to this commission cut. That said, of course I will sign it. The seller agreed to help my client by giving the credits requested. I should not expect the listing agent to take the cut. It has been a recent topic at meetings and I'm told that our MLS will address the situation since it is becomming an issue. 

Janet Gaut

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I spoke the head of our MLS dept in this regard.  They have specific language about this.  Net commissions after seller concessions are permissible.  It just can not be stated that way. According the MLS I belong to it should be mentioned in the private or broker's remarks, basically saying terms, conditions and commissions are subject to the lender/seller approval.  I then follow the remarks by stating it's not a short sale and for the agent to call me for an explanation.

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I find this response almost repugnant coming from an "official" from the MLS committee

"They have specific language about this.  Net commissions after seller concessions are permissible.  It just can not be stated that way"

The concept behind the MLS and the Board of Real Estate is to allow sellers to list their property so all members have access regardless of the value of the property or the list price!  It was established with the intent that compensation MUST be offered to all members for MLS ACCESS.  The K.I.S.S formula of calculating commission was based on absolute dollar amount or percentage of final acceptable price.  Concessions have nothing to do with Commissions and exectuing our assignments!  Every deal has consessions on both sides of the equation.  This sounds like a shell game if you ask me, between brokers and not the general public who is paying for it! 

What difference does it make if the offer is below the mortgage balance.  That's the only reason we are having this discussion!  Regardless of the offer the seller gets NOTHING!  So are we saying the lender has the right to change that commission?  Since when does the lender (lien holder) have a right to change any commission?  If you allow a 3rd party to dictate the commission, is that not the same thing as price fixing?  If the 3rd party wants to change the commission structure then It's only common since that the 3rd party have the deed in their position prior to any negotiations over the commission.  The party with the DEED determines the commission.  The lender can make all the demands they want but as long as they are a Lien Holder (3rd party) they are just barking at the moon! 

This is why we have a foreclosure process.  So I contend if the property is short the seller gets NOTHING the commission stays the same.  If the offer is less than the mortgage balance the lender has a decision to make.  So if the buyer wants the property there are one of two alternatives.  Pay what the lender demands or wait tell the foreclosure auction.  This really boils down to the buyer's position.  Remember the seller gets, SQUAT!!!!  As long as the offer is less than mortgage balance the lender has nothing to say about it other than yea or nay!  Even if the lender asked for commission concessions it would still have to be acceptable by both the buyer and seller.  Anybody with an HP calculator understands it's the buyer's money that pays for everything even the consessions!  Why do you think the lender wants to change the commission?  BOTTOM LINE!  That's why.  They are manipulating the commission so they can go back to their investors and say they stuck it to the ignorant Realtor who was to hungry to stand on their own principles, rules and regulations of what fair play is!  Why fix what isn't broken? The commission is what the seller (deed holder) and listing agent agree is acceptable. PERIOD!  Why the 'shell game'?

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     I am a Realtor, and I have recently been on the other side of this issue.....as a seller.  When the market started going south last year, my wife and I decided to sell one of our rentals while there were still some prospective buyers around.  Since we had already turned the corner into the buyer's market, and the guidelines had changed for buyer qualifications, the lenders here started qualifying marginal buyers by having the buyer's agent write in the purchase contract that the seller would pay 3% of the buyer's non-recurring closing costs.  I countered the offer by reducing the sales price by 3% (instead of $270,000, the purchase price would be $261,900).  This would make the total commission $15,714.  The buyer came back saying he needed the 3% seller credit to make the deal work, so he countered back at the original $270,000 with the credit.  In effect, I'm still getting $261,900, but now I'm paying a $16,200 commission. 

     So I stood up for the seller (me) and told the agents that if I was going to accommodate this marginal buyer, I was not going to take an additional $500 hit on my end to make the deal work for him.  You can argue this issue all you want, but if Realtors are truly going to represent and protect their clients, they might want to put themselves in the clients shoes and think about what's right for them.  Squeezing them over an issue like this just adds to the low opinion the public already has for real estate agents in general. 

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