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Updated about 2 years ago on . Most recent reply

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Darius Kellar
  • Real Estate Coach
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When realtors buy their own home, how does commission work?

Darius Kellar
  • Real Estate Coach
Posted

My wife is a about to be a licensed realtor. How does commission work when it is time to buy or sell? 

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Chris Mason
  • Lender
  • California
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Chris Mason
  • Lender
  • California
ModeratorReplied
Originally posted by @Darius Kellar:

My wife is a about to be a licensed realtor. How does commission work when it is time to buy or sell? 

 Something I have seen and been told, but can't confirm because I'm not a tax professional:

If she just collects the commission as is normal, that's taxable income.

By contrast if she has the seller sign an addendum specifying that there is to be no commission paid to the buyer's agent's broker, and there will instead be a 2.5% or 3% credit from the seller towards buyer's closing costs, there's nothing taxable as income but that $ was still put to work. 

She will need consent of her broker to do this, more than likely. And maybe her broker still wants their cut, in which case you reduce the commission to be enough to cover broker's cut, and take the rest in form of seller credit.

  • Chris Mason
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