Who normally pays the agent’s fees? The seller clearly has no cash, so it’s the banks or its the buyer - ie. me. The broker is requesting a fee of 2% from me, but I have no authorization to talk to the banks and find out if he would be getting one from them as well.
thanks
Are you being represented by an agent of your own - or did you submit your offer through the listing agent?
Most (but not all) lender’s will pay brokers commissions usually capping at 5% but sometimes going to 6%.
Ask to see the estimated HUD-1 and a copy of the Release (acceptance letter) from the lender.
The Short Sale Realtor
I have to submit through the listing agent (even though I feel he is not trustworthy, the owner is not giving me any choice). I presume he could falsify the estimated HUD, which I will ask to see anyway, but perhaps the acceptance letter would be more difficult?
Do you think it would work if I sent the bank a letter informing them of our fee arrangement? Then even if they can’t communicate with me, they could refuse to pay a second fee (which would also reduce the chances the deal will be accepted)? Or maybe I should just play hard(er) ball and demand that the owners authorize me to speak with the bank too?
thanks again
tough one…
Are you buying this property to live in or to flip?
Are you satisfied with the price - even with the 2% added?
How badly do you want this house?
How desperate are the sellers/agent to get your offer through?
On general principals, I’d have a hard time paying an agent an extra 2% especially if he could already be making as much as 6% on the deal.
You have to decide if its worth the risk to play hardball. Sending a letter would probably be a waste of time - because you don’t know who and what department is handling the file.
You are right - an estimated HUD-1 could be falsified.
If you want to play hardball - simply tell the agent/owner that you won’t agree to move forward and pay the 2% until and unless you speak to the lender personally and confirm that they are not already paying a commission to this agent. You also want to see how much the lender approved for - so you want to see that acceptance letter. (This often has the negotiators name and telephone number on it.)
Good Luck
That’s great advice, thanks so much!
(although it seems like this is all doomed - see my next post)…
Commissions (if any) are usually baked into my offer, so it goes on the HUD by default.
Can you explain a bit more, TBRKT - by baked in do you mean that you pay them but deduct them from your offer?
p.s wd really appreciate it if you could give me some feedback on my post about financing. Thanks!
Example of baked in commissions:
Offer: $100,000
Commissions (5%) 5,000
Est. closing costs/taxes 3,000
------------
Net amount to lender $92,000
In actuality, you are asking the lender to approve a net of $92,000. If you made the same offer and only allowed the agent his normal 3%, then net amount would be $94,000 to the lender. The listing agent’s job is to get the highest amount possible for the seller. These deals a lot tougher since you cannot talk to the lender or the owner directly.
If the lender approved this transaction at $92k, and then you realized you needed some money for your closing costs, and asked you the seller/lender to give you $2000 to cover your closing costs, they may do it if you increased your purchase price to $102,000 (assuming commissions stay the same) since the lender’s net would still be $92k.
My guess is that the listing agreement is giving 3% to the listing realtor, and he is asking for 2% more to be a dual agent and to take it up to the lenders cap of 5%. If I thought this realtor was a scumbag, I’d get my own realtor to earn the 2%. Find a realtor who has been around the block a few times so he/she can recognize any funny business if the listing realtor tries to pull anything. If you were well versed, you could choose not to have a realtor represent you at all, therefore the listing agent may only be allowed 3% from the lender. Or, you can negotiate with the scumbag realtor and give him 1% for representing you in a dual agency and ask him to give you 1% back at closing. So, in this example, you get a little help in closing costs, and the listing realtor gets 4% total.