Bonus commission from buyer to listing agent?
Most Popular Reply
Ya , I see . It is obvious that you don't need them .
54 Replies
- Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes12y
@Nat C. @Sam Leon I don't use a buyers agent for, I'm sure, the same reasons that you do. I changes the dynamic of the relationship. If the sellers agent is suddenly going to double their commission they are going to be very motivated to close. I know far a fact that I would not have 2 of the 5 deals I have done if I had used my own agent. What the selling agent did was bad business, but I feel its about as unethical as using doubling the selling agents commission. Either way they are being bribed to make sure that your offer is presented as in the best interest as the seller, that you get "premier access" to the property & that they are going to insure utmost customer service.
USE THE SELLERS AGENT WHEN BUYING REAL ESTATE
If, and when I decide to sell my properties I will put it in the contract that the selling agent can not represent the buyer or receive a referral fee from another agent. There is no other way to keep grantee they are working in your best interests.
As far as advice, I wouldn't giver her a extra percent. I usually negotiate a percentage of the commission towards my closing costs. Its technically illegal in my state. But it can be worded in such a way that the funds are not coming directly from the agent, so it works out. They still get 4.5% and I save 1.5% on my closing costs.
- 12yJon HuberPro MemberRental Property Investor · Boca Raton, FL · Member since 2014 · 1k+ posts · 713 votes
@Nat C. In ten years in real estate, I've never know for a commission to be negotiated UP after the property was listed. Of course, I've seen realtors take a commission cut to make a deal work. And I have seen commissions be higher before the property was listed... But NEVER ever have I seen a realtor ask for more once she has the listing and a buyer. Honestly, I would put my offer through a different realtor just to cut her commission in half. Based on principle... and this is from a realtor's perspective.
- Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes12y
Nat,
If you do agree to the bonus, make sure it is disclosed to all partied involved. Agent would need consent of seller to accept the bonus.
Mark
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
I wanted to comment in relation to Jim Pipers comment.
I feel that the strategy of asking for a reduced commission is a mistake.
If you are going to be a long time investor buying a lot of properties in a specific area then it's not a good idea.
If you are buying a one off property and nothing ever again then the ramifications might not matter as much.
In residential a lot of the agents are desperate and investors feel they can walk all over them and treat them like dirt as a dime a dozen. The brokers / agents who are highly successful have buyers list they sell to over and over again and each time if you ask them to cut their commission your name will go to the bottom or off the list. That's just how business works.
In commercial my buyers care about the DEAL. In fact they want me to be happy so that I keep bringing the deals.
I just think in the long run you do not get ahead by using that tactic. If you as an investor are brought a deal that makes you a lot of money you should care less what the broker/agent makes. Investing over the long term is a relationship business. You won't win favor and access to a lot of off market properties and first looks that way.
If you do talk to the agent and ask him/her to clarify the bonus commission, I wonder if you could record the conversation? Is it legal to record, wonder what FREC will say about that.
I am surprised so many experienced folks here indicated they have never seen greed and ethics this bad. I run into this sort of things a lot, some much much worse, and I just figured because its Miami.
If the Agent is collecting a commission from more than one party, it has to be disclosed to all parties to the transaction, at least, in Oregon.
It is generally not a Buyer's business what the Seller is paying in commission, but because you are being asked to contribute, you have every right to ask the commission amount the Seller is offering to pay the Listing Agent, and the Selling Agent.
Here are some possible reasons behind it. There is what is called a variable commission rate that some Sellers insist on. Meaning, the Agent has agreed to reduce their fee if they double end the transaction. What this does, is make the agent NOT want to represent a Buyer on their listings. A few of you mentioned asking the listing agent to reduce their commission to 3%, my question to you would be "So you want me to represent both parties to the transaction, have double the liability, for half the pay?" An Agent would not be motivated to do this, and their Broker may have specific rules NOT to double end a transaction if it is a variable commission.
If it is competitive situation, the Agent could be choosing what Buyer they want to represent.
If this is a distress sale and the agent has discovered some liens against the property that the Seller is unable pay, and the Agent plans on paying them to enable clear clear title at closing by contributing their commission, they could be trying to make themselves whole.
I have never asked a Buyer for a commission bonus, I don't think it is smart practice. I also think there is room for criticism in terms of being considered "enticement".
Originally posted by @Mark Del Grosso:
" I started dealing with the lusting agent myself, this is afterall south florida the most corrupt real estate market there is."
Hmmmm your wife know about this @Sam Leon Lol
Oh well you caught me LOL. a lusting agent of course deserves a bonus commission.
- Madison Heights, MI · Member since 2014 · 472 posts · 132 votes12y
I wouldn't necessarily be opposed to it, if it meant that I would get the deal. It just depends on the numbers. I prefer to go straight to the listing agent because I know they are motivated by money, like everyone else. There was a time when a listing agent asked for an additional $1,000 on top of taking both sides of the commission. I didn't complain, because the home was a short sale and was the cheapest listing in the city.
- Residential Real Estate Broker · La Crosse, WI · Member since 2013 · 360 posts · 110 votes12y
I've never seen a listing agent ask for a bonus. Usually around WI and MN the seller will pay a bonus to the buyers agent for closing by a certain date or other conditions.
Be careful of trying to present the offer directly to the seller. If the seller is under contract to a real estate agent in some states, the seller can't deal directly with the buyer.
If that's how listing agents behave down there, I can only imagine how terrible your experience with buyers brokers has been. This is the kind of stuff that gives us all a bad rep. If my clients could get a better deal without me, I'd step aside, but they seem to think I'm useful ;)
- Investor · San Antonio, TX · Member since 2014 · 142 posts · 104 votes12y
You make a number of good points. But let me explain where I'm coming from. First, if I ever had a listing agent bring me a property (I'm talking residential here) then I might have a different view. But in all my years of investing, I've never had a single listing agent bring me a property. (Again, talking residential).
When I'm looking for property, I'm generally not looking in the MLS to start with. I'm generally looking for what I call a motivated seller, who almost by definition does not have his property in the MLS. Now, before I get a course of boos from the agents out here, I'm talking a motivated seller by my definition. This guy may need to sell his property in a week or two. A landlord who has a tenant not paying him, tearing his property up, and perhaps it can't be shown. These properties typically aren't found in the MLS.
When I do look in the MLS, it's generally in conjunction with other searching. So I'm finding this property...and am interested because of some reason. It's not the listing agent bringing me the property...I'm finding the property and going to the listing agent.
Next, I've been in the real estate business for a long time. I've been agent, broker, and owned my own brokerage firm at one time. Frankly, I don't think I need someone to represent me. And the listing agent isn't going to represent me anyway, he or she is representing the seller. I don't think they are going to earn the 1/2 commission off of me. In fact, if I brought in another agent to represent me, the listing agent is not going to earn the full commission. So if he/she is not doing any work on my behalf....well, you get the idea.
I hear what you're saying about relationships. But frankly, it does not jive with my years of experience. I see the listing agents listing property, not trying to sell them.
I notice you're in the commercial side of the business. It may well work different there. The residential side though is oriented toward homeowners, not investors. In fact, if they hear the word "investor" they may well run the other way.
Thanks for your comments.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
Hi Jim,
My typical transaction is in the millions and up with commercial.
I do not focus on the smaller commercial side 300k to 1 million on purpose. The buyers have a hard time qualifying for the lower end properties with a loan and want the world. They also have low capital and are afraid of doing something when they find the deal and losing it all etc. I completely understand but at the same time if they will be permanently paralyzed from taking a chance then they will never buy anything. Lot of time for a small pay check.
It always amazes me how many brokers/agents do not transact and run a company like a business.
I have a group of individual clients I work with. I value the long term relationship over decades to come versus a transaction. Buyers that want to throw stuff on the wall and see what sticks I have no time for.
Commercial is a very different world at least it is for me.
Everyone has a right to their perspective. I respect it but do not have to agree with it.
I just approach business from a different way. I know residential is like the wild west and you run across a bunch of buyers and agents that have no clue what they are doing. It can become a big mess and a headache for a low transaction fee.
All the best and much success with your approach. Real estate is great in that everyone can do their own thing.
Originally posted by @Nat C.:
I went and saw a property today that came up on the MLS. I called the listing agent and said I want to submit an offer at list price. So we made plans to meet tomorrow.
Then she sends me a text and asks if I can do bonus commission. I had no idea what that was so I asked what she meant. She texted back that 'some buyers offer bonus commission to listing agent- its totally legal'.
To me it sounds like bribe money.
I'm a direct buyer with no buyers agent so she'll already get a 6% commission as opposed to 3%. Does anyone have any thought about offering a further 'bonus commission'?
Have you asked them what services you will get for the bonus commission that you can't get for the current rate be it 6% or 7%? If you feel that there are bonus services that seems worthy of an additional percentage or two then fork it over.
Another route you can go is to give the agent a list of demands that you require in exchange for a bonus commission. If they don't deliver, no bonus. Two can play that game.
Kudos,
Mary
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes12y
When we have listed property, particularly low priced properties or lots, we have offered a "Bonus commission" to the selling agency. State law requires that all commissions go to the selling "brokerage". All commissions go to the broker and the broker-agent agreement determines how it is split.
We've never done a bonus commission to the listing agent.
@Account Closed
Long time no see, good to see you're still around, I remember you from the "old days." I do disagree with you on going to the listing agent in all cases. The listing agent is working for the seller, and not for the buyer, dual agency not excluded. Take the example of a REO agent who does hundreds of listings a year for the lenders. Where do you think their loyalty is you as the buyer or one property or the lenders who brings hundreds of listings to them every year, year in and year out?
- Investor · San Antonio, TX · Member since 2014 · 142 posts · 104 votes12y
Originally posted by @David Krulac:
@Account Closed
Long time no see, good to see you're still around, I remember you from the "old days." I do disagree with you on going to the listing agent in all cases. The listing agent is working for the seller, and not for the buyer, dual agency not excluded. Take the example of a REO agent who does hundreds of listings a year for the lenders. Where do you think their loyalty is you as the buyer or one property or the lenders who brings hundreds of listings to them every year, year in and year out?
Hey @David Krulac: Good to see you again too. What's it been 12 years or so? Trust me on this, I have no illusions about who the listing agent is representing. But do I think he's going to take advantage of me? I'm not worried about that at all. I think I'm more than qualified to take care of myself. Either way though, if I had representation that listing agent is going to lose half of the commission. Can't tell you how many times the difference on a deal I was involved in was almost exactly the real estate commission! So early on I just got used to representing myself, and trying to get the commission down so I could make a deal. The fact that I try though doesn't mean that it works all the time. Lol!
- Residential Real Estate Broker · Beaverton, OR · Member since 2014 · 335 posts · 149 votes12y
@Nat C. Did you ask the listing agent why she was asking for the "bonus" commission? I personally would want to know so I would be able to better respond to the request . . . understand her motivation.
If your concern is that she won't take your offer to the seller, she has a fiduciary responsibility to present all offers to her client and could potentially lose her license if it's discovered that she held back.
@Karen Margrave suggested that you contact this Realtor's Principal Broker to see if that is the policy of his/her firm. That would be my suggestion as well if the agent insists that, no "bonus," no property. The Principal is responsible for all actions of the agents in his/her firm. I'm sure he/she doesn't want to see a complaint registered with Florida's Real Estate Agency.
- 12yBrandon CohenPro MemberReal Estate Agent · New York, NY · Member since 2014 · 160 posts · 45 votes
@Nat C. I think I have a similar opinion to most of the agents who have commented. I've personally never heard of a bonus commission for a listing agent and wouldn't pay it. I have had some of my big time buyers offer me one but I turn them down honestly because I think it's a bit slimy and I'd rather have repeat clients than have one solid commission.
In regards to buyers agents, I think the good ones are worth their weight in gold. Buyers often think that they're getting a better deal if they go directly to the listing agent, however a good, honest agent who focuses on the big picture is representing the client and not themselves. In NYC, it's a treat if I'm representing a seller or buyer and the opposing agent is experienced and pleasant. That said, there are certainly a boatload of horrible agents who can cost their clients time and money. Good luck.
Although I agreed with everyone's feedback that her proposition was slimy, I thought I would give it a try and told her I'd give her $2000 if my offer was accepted.
In my mind I was only taking my maximum allowable offer and reducing it by $2000 to take her commission into consideration.
Let me tell you what the $2000 cheese got me from the rat. The lady was calling me several times per day giving me updates and trying to arrange an inspection with the tenants so I could get in and see it. It was the first time in my life where a listing agent was chasing me, not vice versa. She also told me the highest offer that they currently had and asked if I could match it. I know that's not information she's really supposed to give out.
The lady barely speaks English and often puts me on the phone to her husband as he speaks better English. Interestingly, Florida is the only states that I know of where you can get your realtor license without being able to speak a word of English. Yes, the test can be done completely in Spanish.
- Homeowner · Pittsburgh, PA · Member since 2014 · 854 posts · 511 votes11y
What that agent is doing is unethical and she needs to be reported. Wish you would have taken that route.
Originally posted by @Account Closed:
What that agent is doing is unethical and she needs to be reported. Wish you would have taken that route.
David,
The problem is Nat Chan is in Miami and if I assume the agent and property are in Miami, you are basically talking about everyone other agent in that area doing unethical things.
It seems they are not even trying to hide or worry for a second their practices.
I have at times even call up the listing broker and complained and was given the "uhmm uhmm what's your point?"
The first property I bought down here in 2006, the listing agent refused to show me the home saying "the sellers are out of town and I have no key" and other excuses, and after I did some homework and sent the seller a letter to let them know my desire to see their house, I got a call from the owner's daughter who lives in another city. She told me the owner, in his 90s, lives with her now after a stroke, and has been trying to sell his home with this agent, who told her there has been no interest, no inquiry and no showings, turned out the agent was trying to be the buyer, saying that he's willing to buy said property that no one is interested in for a deep discount. The house at the time was listed at 450K and they signed a contract with that agent for 320K! Fortunately the agent didn't qualify for financing and my letter arrived. Long story short I got them to deal with me directly. I urged them to report this to FREC but they were afraid to or didn't want "trouble". This is kind of the norm and it's hard to fight against the tide when they all do it.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes11y
This is why I can't stand residential.
There tends to be a bunch of scummy people on both sides of the coin buyers, sellers, agents are trying to make a buck at any cost.
There are of course some good people in all categories it's just the barrier to entry to buy something is low for buyers and licensing is low for agents. If you have a pulse and a heartbeat and can fog a mirror your good! lol
In commercial at least on average there is a high level of professionalism and not as much BS. The barrier to entry weeds out a lot of these flakes and gamesters.
The buyers tend not to have just read an infomercial for zero down and have 5 dollars to their name.
These residential agents many work part time jobs. They do not care about a violation or losing the license. They care about the almighty dollar above everything else. If they get fined, suspended, probation then they will keep doing it until they lose their license. Some of them will keep doing it even after their license is suspended.
Everyone wants to make as much money as possible but I believe you should have a business you can be proud of and go to sleep at night happy with no reservations of what you have done that day to try and get ahead.
- Homeowner · Pittsburgh, PA · Member since 2014 · 854 posts · 511 votes11y
That is a shame that unethical practice is the norm in that market. I personally would not perpetuate that practice, even if it meant not being able to pursue my REI interests.
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