Is it reasonable for a seller to put in contract: Seller pays seller commission, Buyer pays buyer commission?

9 Replies

That way, if the buyer wants to buy on his own, he can save the $$, and if he feels the need for an agent, he can feel free. The seller or listing agent have no interest. Unless of course the listing agent can find a buyer to represent.

Thoughts?

@Ben Bakhshi  

Most listing agreements will specify that listing agent will get a certain commission and will pay a portion of that commission to the buyer agent.  If there is no buyer agent, the buyer isn't saving any money, nor is the seller saving because the listing agent will typically receive both transaction sides of commission. Placing your suggested language in a purchase contract will not change the terms of the listing agreement. 

I am a Managing Broker and represent clients looking to buy investment properties.  I think they would shy away from that because usually they have enough money for the down payment, reserves, and rehab.  And they look to roll as much as possible into the loan to save their cash.  

For example, lets say the house is $200k and the commission is 2.5% - that is $5k cash that they have to put up. But if the house was sold for $205k it is only $1k more cash with a 80% LTV - $350 more cash if it is a FHA 3.5% down loan

You could, but you'd severely limit your prospective buyer pool, since it will be buyer agents with buyers who see the listing, much more so than actual investors scouring whatever sources the listing agent uses to market.  Sounds good on paper, but in reality.....Penny wise, pound foolish.

I have never seen that. I would say "know" your market. If the market is hot and seller market, with multiple offers and everything flying off the shelf. I think you would be more likely to "get" away with that. If it is a buyers market or slow, you could potentially have alot of trouble as agents wouldn't be willing to show your house. On the other hand, if you did for sale by owner could be a good benefit.

Like everyone else said, you are limiting your pool of potential buyers by doing this. If you put 0% as buyers agent commission, it is unlikely you will get buyers from the MLS. The language in most buyer's rep agreements says that the buyers agent will get the agreed upon commission first from the seller, and if they don't pay, then the buyer. The buyers agent would explain to the buyer that he/she would be responsible for the commission if they chose to look at that property. In most cases, the buyer would decline to see the property.

Solid answers. Between buyers being turned off because they may not be able to roll in commissions to mortgages, or agents simply not showing properties, it wouldn't make sense for the average listing. 

This would dramaticly reduce your buyers.

Many buyers get a realtor 1st, then realtors look through listings.

Not many Realtors are going to be brining your listing up to their clients.

The short answer is raise your list price 3% and have a standard listing agreement.

Do you have a reason for preferring to deal with those who are not represented by agents? As others mention that shrinks your buyer pool. A good buyers agent should be bringing you a potential buyer that can afford your house. People may see FSBO as an invitation to only offer what they can pay or people not seriously looking to buy but willing to make low ball offers, that they may not even be able to close if they are accepted.

Honestly I think the potential to save money is on the selling side.  Do a flat fee or discount broker on your side, but do a full co-op(although you might get away with 2.5%) on the other side.  With flat-fee you will likely have to handle a fair amount of hassle yourself.  You also would be making decisions on touch ups, staging etc without any guidance.

Also, is there an area to mention that if the buyer has no agent, he can save the buyer's agent fee? 

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