Who pays the Realtor?

Question

Hi!  My question is:  Is the Seller or the Buyer responsible to pay the Buyer's Realtor's fee when the Seller and Buyer agreed to the purchase without a Realtor?

Here's the scenario...My current tenant wants to purchase the SFR he's currently living in and renting from me.  He approached me, without a Realtor, and said he's interested in purchasing the SFR.  I said okay.   Yesterday, I received a written offer to purchase from a Realtor.  The Realtor has written within the offer a 1.5% fee.

Mindy Jensen · Answer

Najla S. , What is missing in the otherwise great advice received from so many, is that ultimately it does not matter what has happened outside of the contract to purchase. If your buyer was working with an agent prior to contacting you, the agent should have negotiated for them.

I'm an agent, but I can understand why you would feel blindsided by this sudden appearance of an agent. This agent was not the reason the home is being sold to this particular buyer - they wrote up the contract and that seems to be the extent of their involvement. That they are sort of related to the buyer has no bearing on the contract.

As long as you do NOT sign the contract, you don't have a deal. You can either counter the contract and remove the agent commission, counter with an increase of 1.5% to essentially make the buyer pay it, or accept the offer as-is.

Traditionally, the seller pays their agent a commission, which the seller's agent then splits with the buyer's agent. Since you and the buyer did all the negotiating, I don't see why you should be responsible for that fee. If the buyer had notified you in advance that they were seeking representation, you could have had a different discussion.

Brandon L. · Answer

Najla S. is there any reason you would not want the buyer to have professional representation? That's a sign of a smart buyer.

Typically the seller pays the real estate commission for the buyer agent, but whatever is written in your contract will govern the transaction. I would say you're getting a bargain at 1.5% :)

Dawn Brenengen · Answer

Najla S. The buyer is responsible for paying their own agent, but it is common to ask the sellers to do so so that the costs are rolled into the price of the home.  If your buyer wants you to pay 1.5% to his agent, then raise the price of your home by 1.5%.

You did not sign any agreement with this agent, so it is not your responsibility to pay her.

Ceasar Rosas · Answer

Najla S.

Unless you signed a contract with a Realtor you are not responsible for any commissions. Now, if the buyer signed an exclusive right to represent agreement (This is how we work with buyers as a buyer's agent) then the buyer is responsible to pay the Realtor as he should. The problem here is lack of communication. If the buyer has a signed contract with a Realtor, the buyer should have never negotiated directly with you in the first place. Your 1st step is to find out if they do have a contract and I would ask for a copy. Now, let's say you agreed on a price of 100k and the Realtor included their 1.5% commission I would make sure that, that is on top of the 100k and net to seller is 100k. The 1.5% should be structured as a part of the buyer's closing costs. This is how we'd do it here in NY and please make sure that you consult with someone in your area. I hope this helps a bit!

Mark Parzych · Answer

I agree with others saying to increase the price so the buyer covers the realtor's commission. I've wholesaled to a buyer who wanted to use an agent. We simply added the agents commission paid for by the buyer on top of our agreed upon sales price.

Najla S. · Answer

Hmmm...thanks for your reply Brandon.

Najla S. · Answer

Thanks Dawn!  We appreciate your time and expertise. This is very helpful.

Najla S. · Answer

Thank you very much Ceasar!  This is really clear and helpful.

Najla S. · Answer

Thanks RJ!  That's clear and helpful.

Who pays the Realtor?

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