Hey Infowell read this listing on www.fsbo.com look at the bottom of it where it says.
Agents needs to add their commission to the selling Price
What do you think that would mean? See now I am not a Agent but I would take that as jack up the price to make the buyer pay more so that the agent can make some coin!!
BUYER PAID THAT ONE DIDINT THEY?
Actually, everyone’s RIGHT!!!
And…everyone’s WRONG!!!
So there!
Technically speaking, in most circumstances, the paperwork denotes that the seller pays the commission, ie it is put in the sellers bracket of the HUD-1 statement. Although, I have seen contracts where the buyer showed as paying the agent’s commission on the HUD. This usually occurs when a buyer is using an agent to buy a FSBO and the seller refuses to raise their price to cover the commission or to pay the commission.
And in the listing agreement the seller signs off that they will pay a commission to the listing agent on the sale of the property (remember this part). Likewise though, a buyer that signs a buyer’s agency agreement signs off that they will pay a commission to their agent even if there is no commission listed on the house (as in a FSBO, for example).
Now, the commission is ONLY paid IF a buyer puts a contract on the house AND closes the sell. The seller receives funds from the buyer and gives the commission part to the agent. So, to pay the agent, the seller must receive money from a buyer, ie, the buyer is actually paying the commission.
Another similar example of this situation that most here can relate. Most landlords say that the tenant pays their mortgage because the tenant gives the landlord the monthly rental payment which the landlord in turns, dispurses the mortgage payment to the bank.
BTW, just so this will get off of the agent vs. investor thing, I did a little survey in my office and every agent there felt that the buyer actually paid the commission.
peace out,
Raj
Infowell,
You’re right I have no idea what you do, to be honest with you I really do not care.
The fact is, with my deals I do not pay the commission, buyer does!!!
Well…I was with Roger up until the end cause…
…the Agents in our office (55) & every other Agent I’ve spoken to think so called investment guru’s are pushing this silliness to promote either their product or themselves, or both.
I keep stressing the following point, but no one seems to GET IT or want to tackle it:
If a buyer traditionally pays an Agents commissions because, “without a buyer there’d be no sale”…then the buyer pays;
Those expenses are not debated or tackled because, it’s illogical to even attempt to do so.
However, the Agents commissions are typically A SELLER EXPENSE and are listed among those other expenses on the HUD-1.
The only time Agents commissions are not A SELLER’S EXPENSE are in scenarios that Roger presented in his contribution to this thread.
Well…no
It’s an advertisement! Though I didn’t read it…I’m ASSuming nowhere does it say it sold with the assistance of an Agent over and above asking price, and that the Buyer paid the Agent’s commissions.
Under this scenario;
Seller has a firm asking price & is unwilling to pay Agent’s commissions.
Seller insists Buyer must pay Agent’s commissions.
ASSuming the Seller’s price is fair market value - one of two things is going to happen;
Either the Seller’s home won’t sell, or it won’t sell with the assistance of an Agent, or…
Some Buyer–foolish enough to pay greater than fair market value–is going to purchase it with the assistance of an Agent (wouldn’t be my buyer…I’d advise against it).
This is why so many FSBO’s eventually turn to Agents to list their properties (in fact the overwhelming majority).
Buyer’s want representation, and there’s just too many other sellers with homes for sale who’re willing to pay Agent’s commissions (buyer has choices).
By the way…I recommend that site to investors because, if you can wade through enough overpriced properties…you can find an occasional gem or two. Do it yourselfer’s are more likely to make a pricing mistake than the pro’s. Unfortunately, MOST people think their property is worth more than it actually is.
-Infowell
Well…I was with Roger up until the end cause…
No cause, Mike, and really couldn’t care either way. Just presented it other agents and reported back.
…the Agents in our office (55) & every other Agent I’ve spoken to think so called investment guru’s are pushing this silliness to promote either their product or themselves, or both.
Talk about silliness! Exactly how, or why, who pays the commission would promote someone’s product is apparently beyond my grasp. In fact, why it’s such a big deal to you and everyone else here is really beyond my grasp. But, opinions and backsides and all!
[b]If a buyer traditionally pays an Agents commissions because, “without a buyer there’d be no sale”…then the buyer pays;
Those expenses are not debated or tackled because, it’s illogical to even attempt to do so[/b]
Why is it “illogical” to do so? Let’s face it, without a sale, these would not be expenses at all, correct? So, without a buyer (and their funds) these would not have to be paid. Again, the traditional way that these get paid is at the closing, with the funds provided by the buyer.
Raj
Why is it “illogical” to do so? Let’s face it, without a sale, these would not be expenses at all, correct? So, without a buyer (and their funds) these would not have to be paid. Again, the traditional way that these get paid is at the closing, with the funds provided by the buyer.
It’s illogical because, under this belief “without a buyer (and their funds) expenses would not be paid” means; every seller on the planet with a product or a service to sell suddenly no longer has ANY EXPENSES…because, without a buyer there is no sale.
I’m not debating that without a buyer there is no sale (that’s a given). I’m arguing that once a sale occurs - both parties have expenses, and unless agreed to by all parties…sellers pay Agents commissions the overwhelmingly majority of the time (see HUD-1).
Keith put it best…“Buyer’s pay Agents commissions” would never stand up in court.
This is 1st day high school level accounting.
-Infowell
Actually that’s not correct at all.
If you want to break it down to very elementry accounting there are fixed costs and marginal costs / variable costs.
The seller has expenses that are not paid for by the buyer. These include property taxes, his/her own debt coverage expense, his overhead and holding costs. These are fixed. By that I mean that they take place whether this transaction occurs or not. These costs are paid by the owner of the property regardless.
The variable, or transaction costs, are paid when the transaction takes place. Since these costs are taken out of the funds paid at transaction, they are indeed paid for by the buyer.
Your argument about ‘ANY EXPENSES’ is 100% wrong since the fixed costs do indeed take place regardless of transaction. There is no way to argue that those expenses are paid for by the buyer, but there are plenty of ways to debate that the transactional expenses are indeed paid for by the buyer.
“The variable, or transaction costs, are paid when the transaction takes place. Since these costs are taken out of the funds paid at transaction, they are indeed paid for by the buyer.”
That’s your debate?..seriously?
I’ve got to run…so you’ll have the opportunity to rethink that stance before I shread it.
-Info
LOL, shred it? You haven’t shown the ability to shred any debate presented on here.
Here’s a hint, when many people who are familiar with the industry disagree with your point of view, it’s entirely possible your point of view is wrong.
Now, you disagree with mine, so you think mine is wrong, that’s fine. But to say shred? The fact is an argument can be made for either case being true (who pays for commissions in this instance) but neither can be proven to be absolute.
The bottom line is that even members in your own profession have disagreements to this, so it’s pretty obvious that it’s not a clear cut ‘right or wrong’ answer.
Even some of your own posts show that when you purchase a property, you reduce the price by the commission due to you (the buyer). If the seller were paying for the commission what would be the point.
Any sales concession that affects the final sales price can be considered ‘financed’ into the loan. If you agree to $100k sales price then tack on 3,000 in closing costs and add the cost to the sales price in an addendum, the buyer is financing in the closing costs, despite the fact that they show on the seller’s portion of the HUD. That’s the principle that I’m arguing.
The “need” for a real estate agent (forgive me as I actually address the OP) depends on the comfort and experience level of the parties involved, so thus it often varies per transaction. My mentor as a general rule will not work with an agent, but then he’s been doing this for over two decades. Sometimes, however, he comes across a property and it is agent-represented so he will either wait until the listing expires with the house unsold (an alarmingly frequent occurence), or if he just HAS to have it, he will work with the agent (not frequent in any way shape or form).
When I turn in bids on HUD and REOs (he doesn’t like to do those, he does SS, FSBOs and CF deals), though, of course there is an agent involved.
If I may be so bold as to add, there is NO NEED for an agent who can’t rely on his/her skills of persuasion and knowledge to lead another to understanding, and must then resort to condescending and insulting remarks to support a rather unnecessary debate. As my grandma used to say (though I’m not sure why): not calling out any ducks, but if you’ve recently waddled over and done some quackin’, guess what???
Now that is Funny and Grandma was correct!
And also Sorry infowell I agree with her mentor!
If I may be so bold as to add, there is NO NEED for an agent who can’t rely on his/her skills of persuasion and knowledge to lead another to understanding, and must then resort to condescending and insulting remarks to support a rather unnecessary debate. As my grandma used to say (though I’m not sure why): not calling out any ducks, but if you’ve recently waddled over and done some quackin’, guess what???
Kinda condescending don’cha think?
My contributions here have become pointless as have others who’ve had worthwhile information to share.
I’m coming off the best year by far I’ve had over my 16 year career, and it dawned on me after my last post…I don’t make a single dime debating adversarial and combative personalities here.
Persuasion is not my forte’…knowledge is, and I’ve made a considerable amount (as have my partners) by putting that knowledge to work.
Guess ya’ll are stuck with the Firetruck/Hot Dog Mentor & the Underwriter (think if they made any real money…they’d be spending so much time here bashing on other professions?).
-Infowell
infowell, do you have small feet, because you seem to be defensive and compensating for something. just an observation.
Bottom line is someone’s paying my commission to deal with this bs between the broke newbie investor and the seller who thinks they’re sitting on gold and I don’t care who’s pocket it comes out of. I managed to get both parties to the closing table without anyone killing each other, ducked two garbage cans and a staple gun in the process, I deserve every cent!
FYI-Besides the above being a true story…my contract states that the seller shall pay my commission and in the event they do not, the buyer is obligated to pay my commission (whatever was originally agreed upon in the BA).
“infowell, do you have small feet, because you seem to be defensive and compensating for something. just an observation.”
Ironic question considering your handle (LOL).
I’m 6’4", 275 lbs & sport a size 12…thanks for asking (interesting factoid: did you know that our noses, ears, and feet continue to grow throughout our lives? Nature’s cruel).
“Bottom line is someone’s paying my commission to deal with this bs between the broke newbie investor and the seller who thinks they’re sitting on gold and I don’t care who’s pocket it comes out of.”
I like that line…especially the part about the bs…so apropos.
When working with investors I’m very cautious (more cautious than I’d normally be). I’d rather partner with the right investor than work for one, and I’m going to find out everything about a self-described investor before I’ll become involved with them in any way.
The reason I’m so cautious ???
Too many are overly arrogant…too demanding, and are some of the most problamatic clients an Agent can hope for.
I find it telling that those investors with the most experience tend to be the ones who listen best. They’re open to knew ideas and leave their egos at home, preferring to make money instead.
Those investors who’ve had a success or two & need to continually stoke their egos tend to be the most impossible to work with.
-Infowell
I find it telling that those investors with the most experience tend to be the ones who listen best. They’re open to knew ideas and leave their egos at home, preferring to make money instead.
The difference between yesterday’s investors and today’s is in the lastest episode of Property Ladder. I swear I think I saw three of my clients on the show last week. :-[
That’s why I don’t negotiate my commission.
Funny you mentioned that…I was typing up a paper this week and used that word (non-word) in a nutshell if you just say “regardless” you are saying pretty much the same thing…
found this for those interested…
—Usage note Irregardless is considered nonstandard because of the two negative elements ir- and -less. It was probably formed on the analogy of such words as irrespective, irrelevant, and irreparable. Those who use it, including on occasion educated speakers, may do so from a desire to add emphasis. Irregardless first appeared in the early 20th century and was perhaps popularized by its use in a comic radio program of the 1930s.
now back to who pays…already in progress… 
This topic again?? INFOWELL WAS RIGHT…
I live in Bailey Colorado. And had a Realtor BEG me to list my house for 1.4% and after her begging for 3 months I decided to let her. Here is the catch NOTHING is moving here and I mean NOTHING. So I told her that if I sell it on my own she gets nothing. She asked my asking price so I told her $398k Now if I did not have her I would sell it for $380k That way I break even. right at the 380k that I want. So that being said if the seller was to knock on my door I would sell it to him for 18k less. So the SELLER pays the Realtor the Buyer just pays a higher price to have them show the house and write out a contract.
P.S. I have a offer on my house with out the Realtor right now for $380k
“Here is the catch NOTHING is moving here and I mean NOTHING.”
I’m getting a better & better feel for why you’ve such a low opinion of real estate agents…you evidently work with the wrong ones.
An Agent willing to list @ 1.4% has got to be desperate. Even discount brokers know they’ll have to offer MUCH more than that to attract Selling Agents.
We don’t want to be working with desperate Agents (there’s a reason they’re desperate), and if you’re willing to do all the work yourself & take all the risks (which are substantial)…who needs an agent at all?
80% of Agents DO NOT manage to recertify at the end of their two year renewal period. Of the remaining 20%…only an estimated 19% make enough to feed a family.
It’s a very small percentage of Agents indeed, that manage to make a lucrative living, and there’s a very good reason for that (brains & staying power).
Those are the Agents one should strive to work with. But sadly…if you bring an attitude…they won’t give you the time of day (they can pick and choose & don’t need walking migraines waiting to happen).
-Infowell
P.S. The market here leads the country. We have 5 of the top 10 appreciating markets nationwide & 10 of the top 15.
“That’s why I don’t negotiate my commission.”
There’s absolutely NO reason for a successful, proven Agent to lower their commission…especially for problamatic, adversarial people.
I lower my commission for family, friends, or repeat customers who appreciate my expertise.
-Infowell