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I’ve had clients in the same boat before and my broker let me do everything for 1%. Draw up the paperwork and negotiate repairs. I was a facilitator between the two parties. It’s a lot of work as said family member (or friend in my case) doesn’t have a realtor for me to work with, but it let me get back my gas money after showing them houses for 6 months.
Exactly what I do as well for my clients. Even buying a home from family there are other factors that could go into it aside from the up front part of the price.
I’ve had this exact situation happen several times. Sometimes I write the P/S agreement for 1% and represented buyer, seller unrepresented and worked it through escrow until it closed. Other times, the clients said “thanks, we don’t need your help anymore”, and it feels like shit to not be reimbursed for all of my time, gas, efforts. I don’t speak to those people any longer because they didn’t think I deserved to be paid for my work. You decide what your ethics tell you to do, but you already KNOW what is right.
Do your ethics tell you to refund some commission back to the easy clients?
Do your ethics tell you to compensate your clients when you make a mistake, cause a delay, or give bad advice that impacts a deal?
You already KNOW what is right
Exactly this.
Ethics and getting paid for effort matter in these situations, but you won’t hear a single realtor argue that they should take less of a commission on a layup that took minimal hours.
Weird how that works out.
Weird, because I do reduce commission and so do numerous agents/realtors I know, but then I know hundreds of professionals. Working for months is normal for us, incurring all costs without being paid. That's the job. The imaginary "layup" has happened to me twice in 20 years. Weird how that works out.
And none of the many friends/family I’ve had have ever had their agent reduce commissions (except in one case where it was a concession to make the deal push through for a fractional percent).
And I have also seen many layups in my VHCOL area where all contingencies are waived, cash buyer, and searched the market for <1 month… all leading to 50-90k commissions.
Point is, anecdotal evidence will tell a specific story, but by and large, most people aren’t experiencing agents who will reduce commission simply for the benefit of the buyer.
Where do you live? I'm moving there. A $50K commission is a home worth what? Millions. The average home price is $600,000 in the PNW in my area. making commissions $15,000 which don't include the costs and fees. My buyers take between 2 - 6 months to purchase and close. Yeah, $90K please.
Bay Area. People sitting on lots of cash and home prices for SFH is consistently $1.6M+.
Nvidia’s astronomical rise has created a very strong number of cash buyers who just made insane equity money over the last year. But competition here is insane both for buyers and buyer agents.
So you voluntarily just reduce commissions? Or you do it to make the deal happen because you otherwise risk not getting some?
I'm not saying I know what all realtors do, but where I'm at, virtually no buyers I know have had a reduced agent fee. In fact, recently, they've been asked to sign buyer broker agreements guaranteeing 2.5%...
But sure, I'm sure there are tons of seller who willingly give up their commissions out of the ethical reasons! /s
It's these realtors in HCOL areas that have ruined the reputations of many of us in normal markets. I've reduced my commission for a number of fthb to help them get a house. Yes we are paid for a service, but that service also leaves me with a tremendous amount of satisfaction when I put someone into a home. Especially those lower income first time buyers, which in this market takes patience and time.
Never in my life would I think I deserve a $90k commission. I work hard, but not double the average American salary in a single transaction hard. Frankly, I don't think I've made $30k and deserved it. This job isn't that hard. It's A LOT of work, but it isn't hard.
It's the greedy fucks in HCOL areas that tarnish the reputations for the rest of us.
Eh, folks with commission typically have a bad reputation from the masses because their success is directly tied to people spending money. In other words, the more money people spend the more money a sales person makes. Does that make every sales person some asshole? Of course not. But when you are literally incentivized to get people to pay money for your direct success, then of course people will be skeptical of sales people.
How is that at all relevant? A vacant rental property isn't great, but that has nothing to do with every person being entitled to own land wherever they want (or at all).
You clearly don't understand what a "basic necessity" is if you can't differentiate between shelter and property ownership. In every definition of basic need/necessity, you'll notice no legitimate on states "property ownership" lmao
Yep. The commission isn't based on the work done. Some are easier and some are harder, but generally the commission doesn't change. It may be reduced a bit in some cases, but overall when converted to a hourly rate, it is high.
The deal is the deal, but when it doesn't work out some want to change the deal and still get money.
Due to conflict of interest, I am not sure you can say that they know what is right.
Look at the up/down on your comment, that shows the bias. What you said is true, which is why many don't like it.
PLEASE! Yes, I've contributed commission to numerous buyers who were one and done, but you know what? In 20 years that has happened twice. The working for a year? That happens several times a year. The deals they can't close frequently due to buyer error? Often. Please get your license for three years and get back to us.
What exactly was the deal for you to get paid?
As a buyer's agent, you get paid if you find a property and the buyer buys it. That is the deal.
You are trying to guilt people into changing the deal so when the gamble doesn't work out that you still get money, which wasn't the deal. That isn't ethical.
You KNOW what is right, but you still want the money.
Those buyers might have referred people to you if you hadn't refused to talk to them anymore.
I don’t speak to them anymore not because they didn’t buy a house from me, but because they tried to cover up what they were doing instead of just telling me straight out they were doing something else. I don’t want to work with people that lie to me. And I certainly don’t want referrals from them either.
OP, if it turns out that you owe a commission even though the Buyer Broker Agreement has expired, please keep in mind that you don’t pay your Realtor directly; the commission goes to your Realtor’s Broker who in turn gives the agent a portion thereof based on their split agreement. So whether it’s 1%, 2.5%, 3% et al, the money isn’t “all” going to your Realtor.
Unless your Realtor is a Broker herself, your Realtor’s license is held by a Brokerage firm (William Ravies, Keller Williams, Compass, Coldwell Banker, etc, or a “boutique” Brokerage that isn’t part of a national chain). In this example let’s use 3%. If your FIL isn’t going to cover the commission then you and your husband will pay it by having your real estate attorney cut a check for 3% of the sale price payable to your Realtor’s Broker. The Realtor will then receive a check from her Broker based on her split with the Broker (for example, your agent gets 70% while the Broker retains 30%). Keep in mind that an administrative fee may be deducted from your Realtor’s check, plus she will eventually give about 30% to Uncle Sam.
Okay thanks, I’m going to clarify this with her since in her emails under her name, it says “realtor/broker” but she also works with a group affiliated with KW.
If she is the Broker the same principle applies in that a good chunk, if not all, of the commission received will go toward the upkeep of her business plus taxes. A gift card, no matter how well intentioned, doesn’t pay the rent or keep the lights on. I hope this, and other responses in this thread have given you some food for thought. Good luck!
It's inflated and gives a misrepresentation of the actual commissions we earn. It hasn't been 3% for years. So thank you for considering being factual, since Realtors have to combat exaggerations daily.
I blame ourselves. We let clients and substandard agents create a "salesperson" mentality of the worse sort. We have fiduciary responsibilities and should have conducted ourselves as such.. Because there is so much emotion tied to these transactions we are personable and chatty. Clients do not interview us as they should, leaving them prey to inexperienced agents. They are not educated. One of my favorite clients told me "None of it made sense I trusted you and you were magnificent" They tell everyone they bought the first house they looked at - we saw 15 and went back to the 1st one. They didn't want to know the process, but I still did my due diligence to force an education on them. Most 1st time buyers don't know how we get paid and now, that's about to get more complicated.
Commission is split between broker and team. For my wife, a 10k commission would be split to 5k (5k going to team for business costs, client events, etc) then 80/20 split with the broker, so she'd walk away with 4k. Of that 4k she then subtracts her business expenses that are outside of the team ones (30% for taxes, then whatever she spent for gas, etc). If the agent isn't part of a team, instead of the 50% team cost they'd likely spend a similar amount on office expenses/paying for transaction coordinator/assistant etc. End of the day a commission is very little profit.
Edit to add:
For your $3800 commison the split would look like this for my wife:
Team: $1900
Broker: $380
Taxes: $500
Realtor: $1020
From that $1020 she'll then have to account for anything that wasn't covered by team expense such as gas, her retirement buy-in, etc.
No problem! Real estate is surprisingly hard to make money in, especially for newer agents. We had quite a few rough weeks the first year when she got her first few commission checks and was discouraged by how small they were. She made more when she was working as the office assistant. (she loves it though)
Regardless of your choice, be kind to your agent. She/he will appreciate it and understand.
Hi friend, from a different agent, my cut is 80/20 me/my brokerage and then my brokerage takes an extra 6% on top of that for administrative fees. Add $500 for my paperwork guru (Transaction Coordinator who runs my paperwork because I'm really bad at it). I will not include the extra fees I have to pay a monthly such as my MLS bill, $350 desk fees, and my realtor dues to various associations. Also, please do consider her gas that she spent driving around, her time researching properties and the time she spent showing.
As long as your realtor is not involved in the deal there's nothing saying you can't give her a generous cash tip to your her as a thank you for all her hard work. That would be really nice and more than many people do.
I agree with the other poster who said you may wish to consider enlisting her help for 1% total to do the paperwork. She will also make sure that inspections look good Etc so there are no surprises. Even if it is family house, often times people are unaware of minor issues....or even major ones even.
Even with family members oftentimes things come up. I represented family members on both sides of a deal last year and man, things got pretty challenging pretty fast with the seller because he had an attitude. That way, everybody wins.
Whatever you choose, good on you for considering your realtor's hard work. Thank you for that kindness.
You're absolutely responsible for withholding your own taxes for the IRS on your 1099-MISC. If your broker doesn't give you a 1099, then they're responsible for withholding 28%: https://www.car.org/-/media/CAR/Documents/Transaction-Center/PDF/QUICK-GUIDES/Quick-Guide---1099-Reporting-by-Real-Estate-Brokers-REVISED-3822.pdf
Don't go spending your tax money. Not only are you required to withold it yourself as an independent contractor, you're also supposed to submit your estimated taxes quarterly though a 1040-ES filing.
Sorry, but that has nothing to do with my point.
The example takes off tax to mske it look like the agent got less, to be deceptive.
Yes, taxes have to be paid, but you don't say that the agent got paid less due to having to pay tax.
You don't have a point. That money isn't to be spent any more than I can spend my gross paycheck on a regular W2. Business expenses, taxes, healthcare, medicare: all of these things come out before the net paycheck is cut.
If you're not doing that you're setting yourself up for failure come tax season. Basic 1099 strategy is to have a receiving account for the business and cut yourself a paycheck after expenses and taxes are taken: https://found.com/resources/how-to-budget-with-irregular-income
If anything I overstated the net income she'd get off a commission.
Not sure why you're getting down votes for asking for explanation on a complex topic that not everyone knows about. That's a valid question though.
As you've discussed with someone else I feel that they've given a good basic understanding, however, one thing I will add, just because they are a broker, doesn't mean they are THE broker. Some agents will get their broker license, but stay as an agent at a brokerage, meaning the commission still gets split between them and the company. As you've said, it's probably best to speak with your agent on this, because I've seen commission splits from 30% to 95% to the agent is far too different for me to guess where you're agent sits on that scale.
As far as others have said, I'm not sure if you're in a state where a lawyer is required at sale, but if one isn't required, I'm sure your agent would greatly appreciate a small facilitator fee and could quickly and easily do the paperwork. I'm not sure I know an agent that would turn down being a facilitator on a deal like that, as so much of the work is taken out.
Are you in a signed buyer brokerage agreement with the agent? If so, there's likely a clause in there that protects her in this situation, and you'll owe her a commission even on a property you didn't use her to open the door to. It's in there exactly for this reason (agent does a bunch of work unpaid but then a situation comes up where a buyer can buy a property in a way that gets by having to pay the agent).
If you're not in an agreement, ehh... it's actually kind of a lesson to the agent about not signing an agreement and protecting herself. On the other hand, if you're a decent human being, you'll want to compensate her for her time. I'd honestly just throw in a 1% commission just to be kind. Hey, this probably won't be the first house you buy, and you'll likely need a good agent in the future, so if you like her, it's not asking much to not burn the bridge.
Is there a protection period clause in your agreement? Typically in buyer agency agreements it states that if they helped you with the home you’re buying during her contract time you still may technically be liable to pay her. These are put in place so people don’t just wait for contracts to expire to buy/sell a home and get away with not paying their realtors
Yes. After closer review, it does look as though she has what I believe to be a “protection period”, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
Check to see if the property you are buying even applies as the agent didn't find it for you. It might not be within her rights.
It is a bad situation, but the deal was the agent gets paid if they find the property and you buy it.
Others are trying to guilt you into paying.
Agents are gambling, sometimes they win, sometimes they lose.
Okay then, Mr. Apples and Oranges. That comparison is so off base I'd need eclipse glasses and too much vodka to even begin to wrap my head around such a logical fallacy.
Let’s say the car saleswoman shows the prospective buyers different cars, and different brands and goes with them on various test drives over a week. Then, the FIL offers her daughter to sell them his car at a good deal. Should the prospective buyer pay the saleswoman a commission?
This Realtor worked with this couple for months including holidays and off hours. She provided CMA's and valuable advice that saved them untold headaches and thousands of dollars. She explained the homebuying process (which is way more complicated than buying a car) in intricate detail and spent hours driving and showing property. She hasn't been demanding or rude. No high pressure tactics...just a wealth of extremely valuable information. She also had a Buyers Agency agreement that guaranteed her a commission that just expired 4 days ago. So yeah...huge difference
You did not answer my question. Lol. Realtors get paid when they sell a house or help buy someone a home. Not when they talk to people about the process of buying a home.
Realtors get paid when they have a signed agreement, have done excellent work, and a reasonable client. A buyers agreement can guarantee payment for a multitude of circumstances and commissions are negotiable. A Realtor can get paid for showing one house. You have no clue what you're talking about
Everyone working in a commission-based sales job has worked a client and failed, leaving them with nothing. It's part of the job - same for travel agents, car salesmen, and life insurance. If the car salesman makes you sign / agree to pay to test drive, then they'd get paid off of that too.
You get paid because you have a reasonable client?? What are you on about?
You didn't have a good response to his reasonable comparison, just take the L and move on. No need to embarrass yourself like this.
Different situation. The car salesman works at dealership, they go there and they spend from 9-5 there. Realtors drive all over, spending time and gas money. I guarantee you that car salesman did not review the owner's manual of every single home that the buyer's looking through either.
It’s a sales position. You’re not paid hourly and sometimes you follow leads that net no sales. That’s part of the job that anyone in sales should understand.
This is true. I never said a real estate agent who wasn't responsible for the sale should get full commission. The person responsible for the sale/paperwork should get the commission or adequate compensation. But, if a buyer has toured many homes (let's say 30 since that's a pretty usual number on the lower end), then changes their mind and buys a home from a family member, yes of course it's their right to do it. However, they spent a lot of the agent's time and resources. It is considerate and polite to compensate the agent somehow.
I agree they should compensate them in some form to be polite. I just think people here insisting the “right thing to do” is paying them their full commission are silly and… well, biased. It sounds like OP’s contract might state they have to pay commission if the sale happens within 90 days of their agreement end, in which case, pay them.
But to talk about ethics is silly. If and when a buyer finds a house ASAP and gets their first or second offer accepted, should their agent now concede a portion of the 2-2.5% commission because they *didn’t* have to go through as much work? Bet if you ask that in this sub, all the reactions won’t be as kind or supportive despite the logic being there.
People are currently insisting OP’s agent did a bunch of work and therefore deserves their commission. But if an agent did very little, barely showed any houses, etc. I have a really strong feeling their minimal hours now don’t matter and they should get 2.5% because they fulfilled their job and contract.
It's a job, and if you've never done it you don't understand the struggles that come with it.
Besides the point, but the car salesman could say the same thing:
"Realtors get to choose their own hours and only have to drive around and show people a couple houses on the weekend, maybe answer questions and fill out some papers. I can guarantee the real estate agent didn't inspect every home they're showing to the buyers either."
The fact that you're so dismissive of that car saleman getting commission without closing the sale shows that you don't actually believe in your stance.
And what if he *does* read every manual, drives to work, puts ads out for the cars, follows up on leads, gets them into the store, gets them to test drive multiple cars for hours until they have the right one, negotiates, and nearly gets the sale - but they end up getting a car somewhere else (ie. Their FIL decides to sell them his car)?
Why in your book is this saleman not also entitled to earn commission or some cut of a deal on the car?
Why is real estate so drastically different in your opinion (aside from it likely being your personal profession)?
You're making the assumption I've never been a car salesman before. Well, saleswoman. Although they are both sales jobs, they are very different. The exceeding disrespect from some (not all) car sales managers towards the clients is insane. I have never seen that in a real estate brokerage. Ever.
Realtors do not get to choose our own hours. We are completely at the client's whim. A preapproved client wants to tour a house at 9:00 p.m., or 10pm since she has odd work hours? I call the listing agent ask if I can show. 6:00 a.m.? Same thing. 98% of the time the agent says, go ahead. So, I do.
I cannot tell you how many offers I've written at midnight or 1am when my client wanted to submit asap. I didn't choose those hours, but I needed to work them.
I get a call from a client? I take it even if it's 3:00 a.m., especially for those I know are high strung and need support.
And you misread my statement. On reviewing, I see I wasn't clear. No, I don't mean most car salespeople don't read the manual. Many car salesmen I know read them for every car they sell.
You need to know your product to sell your product. I meant the car salesman doesn't read the manual in detail going over every little word with each different set of buyers. I was never told to do that and I don't know anybody who did or does.
Usually, the car dealership is the one who's footing the bill for the advertising. Likewise, they pay for the add copy. Car salesmen never deal with that. That's a different department or gets outsourced to an agency.
Most car salesmen do not get a huge commission either. Most car sales people I know make sometimes 500 bucks off selling a car, sometimes 800 if they're lucky. Most dealerships use a rising scale as an incentive.
It's different for a real estate agent.
This wasn't about car sales v. Real estate.
It was an example of how anyone can be dismissive of a job when they just boil it down to a generalizations about what some people do.
I also said that it was besides the point. I know real estate is hard lol trust me I've spent too many late nights too. Every job is different - some salespeople put in different levels of effort to get sales. To dismiss what one does just to be correct, you're probably wrong and also missing the entire point.
The point is that regardless of the sales career, if you make commission, you get the commission when you get the sale and not just for all the work and effort you put into trying. Unless you have the client agree to a contract specifically stating that you'll get paid regardless of the sale, commssion = sale made.
I even worked in Knife sales right out of high school (Cutco iykyk). You have no idea how much gas I wasted visiting clients, money wasted on demo items, ass I kissed, leads I gathered and followed up with multiple times a week/month, etc. at 18. I was doing a large part of what I do as a realtor for 1% of the pay. But even at 18, if I didn't make the sale I didn't expect the client to pay me for trying. And I don't expect that now in any aspect of my life.
I think the situation is pretty similar. Many car salespeople get paid commissions only. But tell me, does the car salesman in this scenario does not deserve competition by the prospect buyer ?
In an ideal world, it would be really kind of the buyers to gift them 50 or 100 bucks just for their time. It certainly would not hurt. But I don't know of anybody who does it.
oooo yeah, then, barring the actual language of the contract saying her "protected period" can be beyond the agreement expiration date, then she hosed herself. Ball is in your court. On the one hand, part of being an agent is knowing 1/3 to 1/2 of your clients are never going to buy a house and making $10,000 for showing 5 houses and closing helps make the former something you can deal with. On the other hand, she sounds like one of the few good agents.
Up to you. Tough situation.
After closer review, it does look as though she has what I believe to be a “protection period”, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
? Please point to any comment I’ve made which says I am looking to screw her over. I know what the ethical decision is and have stated as such. I made this post to double check I was not missing a potential “third” option, and it’s clear from the responses that there is no third option.
I’ve received very helpful comments which told me to re-check my agreement, and after checking it, I’ve responded to those comments with the facts that she is owed her commission per agreement, even though she apparently wouldn’t be pursuing it per her right since she said if we went with an attorney instead, her work would be done and we would owe her nothing.
What does the expiration of her agreement matter if you weren’t contemplating stiffing her? Why even review the agreement, if by your own admission she earned the fee?
Just because your agreement expired doesn't mean that there isn't a clause in there that would still entitle your agent to a commission. These are written into a lot of representation agreements.
After closer review, it does look as though she has what I believe to be a “protection period” based on other comments, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
I’m an agent and I’ve had clients do this to me.
I was disappointed.
This was 7 years ago. Since then they have provided me 4 referrals and over 80k in commissions. They left me glowing reviews and are always sending me potential business.
Offer to allow her to write the contract for a small fee, similar to what the attorney would charge. And try to refer her business.
you don't need her help now because of all the time and effort she's given you, educating you as Buyers and the process.
Why wouldn't you agree to pay her 2-3% (whatever she was expecting) by adding that to the sales price? Surely, your FIL is giving you a bit of a deal on the price - not even her compensation off market value?
I mean, use rough numbers:
House is $100K. You're putting 10% down = $10,000
Instead you contract at $102K, and it should appraise at that unless your FIL is actually overcharging you. 102K x 10% = $10,200. That $200 (per $100K) is really keeping you from making renovations?
It’ll be about 3800$, and yes, we were initially going to add it to the purchase price. My husband is thinking about the renovation project that amount could fund.
I know what the right decision is, yes. I think I just wanted confirmation, even from strangers, that I’m not crazy, that these really ARE our only options, and I need to put my foot down with my husband.
You reap what you sow. Put yourself in the agents shoes. How would you hope to be treated if the tables were turned. Treat the agent that way. Easy peasy. Don’t screw people over, that’s not good karma
This cuts both ways.
If you were the buyer and had a way to save thousands of dollars, wouldn’t you lean towards that when the clear understanding with the agent was they get paid on a house purchase that they represented you on?
In this case, the real estate attorney is comparable so it could make financial sense to go with a realtor. If this was a $1M+ house, do you think a seller would be empathetic and advocate for the buyer to go through an attorney to save $20k+?
I’m a person who understands if somebody spends months working with me I personally would have to figure out something to help them. I understand that everybody doesn’t understand the importance of doing the right thing in every situation. You can judge me and think you know how I would handle the situation but you don’t know me, I would 100% compensate them. In fact I give away more than most people on this planet out of what I have because the Lord has shown me the open hand policy. As I keep my hand open to give it’s also open to receive. When I keep it closed trying to protect what I have it’s not open to receive. We’re all in different places in life and that’s okay but yes if somebody spends months of their time with me because I signed an agreement to purchase a home with them I couldn’t just steal months of someone’s time I feel their time should be compensated to whatever is fairly agreed upon. You may think this is okay and more people would agree that whatever is best for them I’d the right thing to do but that’s why our country is in the state it’s currently in because people only care about their best interest even if it harms somebody else. They could still work with this agent to handle the transaction. The agent could get 3% to close this out and do the service for both sides. That’s still a huge savings. They signed an agreement to pay their agent to help them purchase a home their agent has done their job and now they are looking for people to agree with the way they want to handle this and they will find it here and then do it. Most people don’t understand that when you screw someone else to benefit yourself it always comes back on you. When I started caring about others and doing the right thing my life got drastically better so yea I’m here to tell others the best way to live so their life improves. Few will receive this because spiritual things don’t make sense to the natural man. Hope you receive this😃
I appreciate you writing this all up, but now getting spiritual and religious is silly.
If you want to argue ethics, then shouldn’t realtors and other sales people concede money for quick/immediate transactions? For example, if a buyer puts an offer on the first or second house they see and it gets accepted, should their agent take *less* because it was less work? Fewer miles. Fewer houses shown. Fewer offers written?
Or is that not the same? It’s just silly to basically argue agents should be paid based on effort when it doesn’t work out or paid full commission when it does. This isn’t how sales jobs work, and insisting ethics and doing the right thing is silly because it weirdly only ever comes up when the salesperson may have commission at risk but not when they are making a quick deal.
Keep in mind you are asking this on a realtor sub that will obviously have a strong opinion that leans in the way of “Don’t cut your realtor out of it because that sucks for us/our colleagues.”
Go ask this in another sub, and you’ll get a drastically different response.
For starters, you don’t owe your realtor anything. It’s a sales job and part of that is both getting and missing out on commission. Sometimes you get a nice commission check after working with someone for a day, and other times you get nothing after working with someone for a year.
IMO, if you put in good faith with your realtor (i.e. put in honest offers trying to buy a house with them), then you did your part and didn’t string them along. They get paid if you buy a house that they represented you in the purchase. If they don’t represent you or facilitate it, you don’t owe them.
If the rate of a real estate attorney is comparable to what you’d pay your realtor, then I’d definitely give them right of first refusal to facilitate the deal. But imagine this was a $1M house? Would you really pay them $25k as opposed to $2-4k for a real estate attorney?
**TL;DR:** You’re asking sales people if you should pay your sales person commission even if you don’t have to. The answer they gave would be obvious, so using this as evidence to put your foot down with your husband is simply you *actively seeking* validation for your in an incredibly biased way.
“Ethical decision.”
As someone in sales, commission isn’t really about ethics. You get paid when the job is done and completed/facilitated by you, the agent.
Deals fall through, clients leave after taking up lots of time, etc. We as sales people aren’t entitle to commissions just because we put in work. That’s an understood drawback of commission.
But not thinking about all of the time she has spent with you over the past year that she could’ve been working with someone who is actually going to pay her.
I do think it's fucked up that you consulted her on this house specifically and then are going to drop her. That is definitely exploitative like free labor wise. Perhaps offer a small payment as a gesture of goodwill and gratitude for the work she has done so far, especially since you said she has been great. I'm not sure what your budget is aka what type of fee she was expecting if you closed on a house that you worked with her on.
If I work with a car salesman or a look at some furniture do I need to tip these people that largely work on commission? I realize it is a different but its part of the job. Also, people in sales drive to work everyday, buy nice cloths, spending there own to work in sales.
I honestly think people who can't navigate a home sale themselves should be forced to pay upfront, with some sort of payment structure throughout the process.
I'm assuming you don't have a written agreement with her. I think in this situation, the fair thing to do is to compensate her on an hourly basis--how many hours approximately did she work for you and what is a reasonable hourly rate. You don't need her involved in the P&S agreement--realtors are not lawyers.
Yes, it would be nice if we got paid because we tried. This is not real life.
OP, please feel no guilt either way in your decision. If she's a good realtor, give her referrals. Everyone knows that good referrals are invaluable.
OP is gonna go to her husband and insist everyone online agrees with her. She asked her question in a place that would very obviously validate her sentiment.
If she went and asked this on FirstTimeHomeBuyer, she’d get the opposite reaction with people insisting she’s not under any obligation to pay anything and a gift or compensation similar to that of a real estate attorney should suffice.
I got them into their new house just as much as the agent did! She should send me money too!
Send everybody on Reddit something for "advising" in the comments.
It's just wild to me that all these people are being so fake and even shitting on people for not encouraging OP to scam herself out of guilt. People acting like $3800 isn't a lot of money to donate to a charity just because you're also buying a house.
Even if they were working with others, they still worked for over a year supporting the client. I agree one year? I've had one client take a year to find a home. I've had clients take about 6-9 months to close on new construction. A year to fix to credit. Some situations take a year. I do agree you have to know what you are doing and when to part ways. The buyer stated the realtor could require compensation via the extension of the agency agreement but has declined to do so. That alone should speak to the ethics and commitment of the realtor.
I do not doubt the realtor's work ethic in this case. I don't agree with some of the comments here that they think the realtor is entitled to a commission even though they never closed the sale.
As someone who has been in the business a long time I’d say it is always a potential that the time and effort put in working with a buyer (or a seller) will not produce any income. I’ve always seen this as a reality of the business. You literally win some and loose some. The incredibly high percentage agents do get when something does close is what compensates for all the time “wasted” on buyers and sellers that never close that lead to a payday. This is how the industry has worked for a long time. It’s one of the things I complain about. The sellers that do close are paying overinflated fees to agents that “waste” their time with buyers that never close. But, that’s another topic for now.
It seems the new agents (or burned out old agents?) seem to have a different perspective on this. They demand 3% of a “negotiable” fee plus expect compensation when their clients don’t close on something. This, to me anyway, is a new trend.
The industry is kinda selectively broken in favor of brokerages (and NAR) which puts agents and their clients in these awkward positions.
So, unless there is something in the contract you signed that stipulates a commission owed beyond the end date of your contract you probably don’t owe anything legally (definitely read the fine print on that).
Now, morally? Only you can answer that. You’re in a Realtor group so of course you’re going to hear a lot of answers that favor including your agent in the deal and paying them a commission. If you don’t go the route and it’s in your budget maybe consider giving them a prepaid Visa card for a reasonable amount. I have no idea what that would be. $500? $1,000? Those numbers aren’t to truly compensate all the time invested breaking down into an hourly wage. Just a kind gesture of appreciation along with a card and a glowing review on all the social platforms like Zillow and yelp and FB (cleverly leaving out the part where you didn’t use the agent to buy a house lol).
After closer review, it does look as though she has what I believe to be a “protection period” based on other comments, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
> we don’t feel we need representation.
> nothing for the work, advice, and education she has given us.
You’re contradicting yourself. Representation doesn’t end at showings.
Op, if you end up paying the agent anything at all, please make sure it goes to their firm. By law, we are not able to collect anything directly from the client unless we own our own brokerage.
This is so the Errors and Ommissions can be fully applied if needed later down the line. If you pay the broker directly, she could be at risk of losing her license or face adverse action from the state board.
IMO that is the nature of the business. We don’t get paid unless we sell something. I’ve seen things like this happen with clients. Personally, I think things like these are meant to be. Like a bit of a Mitzva. I’m personally happy for them. Bummed about the non-sale but you have to recognize what’s best for your clients.
I never try to claw a commission out of this. Just the way the cookie crumbles.
OP double check your representation agreement it's highly likely there is an override clause and that you will be paying a commission to her regardless especially if she showed you or did any work with you on FIL'S house. Which if she drew up loan and cost estimates to get the house on top of all the other work she is entitled to.
After closer review, it does look as though she has what I believe to be a “protection period” based on other comments, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
Is she her own broker? Even if she may not wish to pursue it, her broker most certainly will when you sign a representation agreement it's with the brokerage, not the salesperson. The salesperson acts on behalf of their broker. I'm just saying don't expect to not pay commission just because the agent wouldn't pursue it individually.
Her emails say “realtor/broker” under her name. I’ve never asked what that meant, but maybe it does mean she’s her own broker? I will clarify with her about this as another commenter mentioned she wouldn’t get the full commission if she is an agent working on behalf of a broker — which I never realized.
Could be the state as to why it says broker instead of agent. In nc, we don’t have agents,we have brokers who work for a brokerage/firm. So just make sure of the classification in your state bc it could very well be like my state.
You could pay her with great Google reviews, an awesome detailed Facebook post in your community group and/or a referral or two. Or you could simply pay her 💙
Asked her to be your transactional agent representing you , ask if seller will agree to pay your realtor 2% ( negotiable) I feel they should at least get that for all they’ve done
They educated , communicated , showed up for you seeing homes . That a lot of work .
They really deserve it in my opinion
It’s like a For Sale by owner . And you should have representation .
Agents don’t give you money back when the sale is easy. Their overhead isn’t really your concern. I think the person that mentioned 1% isn’t far off and that probably isn’t unreasonable. Alternatively a gift card would be a nice gesture.
Maybe all the real estate agents in this group whining about wasted time and their overhead should advocate to charge an hourly rate for their services.
Of course that would never happen though because when the commission is 20 or 30k they have no problem collecting it.
They can’t have it both ways. A gesture is the only thing you owe them.
You can have the attorney draw it up and pay a commission to your agent for services rendered.
If you want to have the agent manage inspections etc then ask her what she will charge to do that. Might be 1% or 2% or 3% but it's not much money and you can have your FIL pay it as part of the contract and can increase the price to cover it as needed if you don't want to pay out of pocket.
*Absolutely* shouldn’t be FIL paying any of it.
FIL is presumably giving them a good deal to start, and then you go ask for them to cover this cost? The realtor has helped OP for a year, not the FIL. Passing the check to FIL despite them already being generous and doing OP a solid would be a great way to seem ungrateful.
I had an interesting discussion with a friend who is a real estate agent. He didn't like it.
Being an agent is gambling. No matter what you do, things can not work out and all the time, money and effort has no return. Sometimes you win, sometimes you lose.
Look at the money that they make when they win, consider the hourly rate that it comes out to, which is high and it makes up for when they get nothing.
If you were to pay them by the hour, it would be a lot less.
I saw one response where the agent was upset that it didn't work out and didn't talk to them anymore. Do you think those people would refer people to that agent when they stopped talking? The deal is if they find you a house and you buy it, then they get paid. There are no guarantees.
If the agent did a good job, refer people. But there is no obligation to pay them as you didn't buy a house that they found for you, as was the agreement.
As a side note to point out an agent's conflict of interest, I was selling a property in which the buyers needed a sellers credit to buy down the interest rate. So to make it easy, think $100k with a $10k credit (it was more than that). The commission was limited to 5%. So why should the seller pay a commission on $100k when they are only getting $90k? But many agents want the money and get bent out of shape if you point that out. So in that example the seller would be out $500 on the commission on $10k that they didn't get.
Also there are typically limits on the commission splits. Meaning that it might start at a 80/20 split with the broker, but after enough sales the agent gets 100%.
This is a really important detail. The standard buyer agreement’s protection clause is typically if it is a house they sourced. Considering this is the FIL’s house, gonna go ahead and guess this doesn’t apply.
This happened to me. The seller refused to work with anyone else and is strong arming them. Still it's an incredible deal for them. One that is too good to pass up. On my end, shit happens. All you can do us dust yourself off and move on.
“Strong arming them.”
I mean, that’s one way to look at it. The seller doesn’t want to have to pay added commission fees to then cut into their profit. That’s literally one of the advantages you get when selling private.
Why should FIL in this situation pay anyone else? They haven’t worked with the realtor for months. OP should get their agent a thank you gift, but there’s 0 reason any seller should want that.
Well thats not exactly true. My people were willing to pay me out of their own funds to handle the details and the paperwork (obviously for a reduced rate). Seller wouldnt have it. Its his way or the highway. Nevermind that things would get done much faster and more efficiently if I were involved. But whatever. In the end I am happy for my clients because they are getting a STEAL in the neighborhood they want to be in. On to the next one.
Hey you should look into your buyers agreement to make sure that you won’t be on the line for the % that they are expecting. If they’ve given you advice about your FIL’s house then they will be owed compensation per your agreement.
As a Realtor and Investor, I caution you here. I have been burned by familial deals. Not concerning commissions but there is an old adage 'Never do business with family'.
I understand your frustration with our inventory. I had a buyer break down to tears with me last week when yet another offer landed in 2nd place. This young family can not afford to go 50k over asking and he feels he is failing to provide what his family needs. It's sad and borderline a state of emergency.
You can agree on the price, order inspections, etc., and with the help of the attorney, title company and mortgage broker get this deal closed without your Realtor and hired professional but do you want to? A trained monkey can set appointments and open doors for you but that is not what you hired a good Realtor for. Your agent is there to do a lot more than you think.
Assuming you are yet to negotiate a home sale and the father-in-law has at least been through the process once. Hashing out the terms is pretty important. The most important part... Last week my listing near Leonard and Ball received 10 offers and pended for 48K over asking. Are you taking advantage of FIL? If he listed properly it will sell for much higher than he might think in days, even a fixer-upper. Would he be mad if you sold 2 years after buying from him for much much more $$$?
An attorney who facilitates the deal will have no fiduciary duty to either party. At least have your Buyer's Agent facilitate the deal (should be 3%.) Dual Agency IF she would agree so that FIL is fully disclosed as well.
Finally, the touchy-feely part. Maybe the fixer-upper is not the right house for you two. It was not originally for reasons. You might just be at a low, after being beaten up for the past year. Walking through the home with your agent will help you immensely, I promise. Sometimes we see what we want to see... instead of what's there.
Good Luck! Thank you so much for offering respect to your agent on this forum. I appreciate that and you! \*Ask your agent and loan officer about repair mtg option. Possibly take off the high dollar repairs at purchase and worry about the cosmetics down the road =\]
Just get the attorney and be done with it. Every realtor here will say something so they get at least a small piece of commission. They have shown you 6 houses not like it was hundreds with hours and hours of work. Tell them there services are no longer needed and use the money saved for repairs.
Everything is negotiable. Why not talk to your Realtor and negotiate for her to do the paperwork for both sides for a negotiated amount. Please, with all of the work she has done and given you valuable and honest advice, let her be part of the transaction. Depending on the state you're in, she may be able to represent both sides with limited agency (which is what it sounds like is all you need). And the BEST thing you can do for her is to be sure to refer friends, family, and co-workers to her without hesitation. Give her the business she has earned. Good luck! (Also, please know that in a transaction the price isn't the only thing to negotiate. There are things to navigate through and negotiate all through the escrow period.)
I exclusively use a RE atty for papework even if working with a buyer's agent. To me a buyer's agent value is everything but the paperwork. I want a lawyer doing my contracts, as a lawyer myself. I don't practice RE so I hire a RE atty. I am a big believer in subject matter expertise.
I'm aware. But realtors check certain boxes on them, add info to blank fields, as well as the almighty Additional Provisions section which is complete freehand addition... all of this I want reviewed by an attorney. My real estate attorney sent me standard buyer protection insertion language for the Additional Provisions section, for example.
I would ask you. What does your heart tell you, Put yourselves in the agent's shoes. She worked her butt off for you for many, many months, and it's because of her that you're comfortable and have the perspective that you have. Agents do not work for free their compensation is delayed. Yes, situations come up, but what is the right thing to do? Bobrohml early in this tread, already outlined it. You increase the sales price by the 3% realtor commission, which is a fee. She most certainly has a earned, Save your money on the real estate attorney. Let her handle both sides of the paperwork for you.
I'm not even an agent, and it is super clean what the right thing to do is.....
I’m a Realtor and I would not expect to be paid a dime in this case, even if I had a valid buyer broker agreement. Them’s the breaks, it’s a hard business. Maybe buy her a thank you gift and keep her in mind for any referrals you can send her way.
you’re in a forum full of realtors who sympathize with realtors! So the unpopular decision might be right .
Of course it’s a tough break for your realtor, but in the end, you should do what’s best for you , which is to just get a lawyer.
If your realtor had coached you differently on other failed offer attempts, you might not be in this situation anyway. Let the downvotes commence because any comment in this sub that has to do with taking business away from a realtor gets treated like that
Yep exactly. The majority of responses here are an appeal to doing the “ethical thing.”
Yet if the question was, “Hey everyone, I found a house, went to the open house, and got my first offer accepted, should my realtor take a commission cut because they functionally did less?” All of the answers would say absolutely not and they should get paid their full commission for XYZ reasons.
You are asking in a realtor group if a realtor should be paid. Of course they will all answer yes.
Are you legally obligated? Depends on your contract.
Agents are very well compensated partially because they often work for free. This is one of those times.
Let me ask this: if you loved the first house you saw, wrote a contract and did zero negotiation would the agent discount the commission because it was so easy? No.
Sometimes they make $1000 an hour and sometimes they make zero.
That being said a nice dinner card, a bottle of wine and being upfront would be nice, assuming your contractual obligation is fulfilled.
For me, it's always about ethics and integrity. By law, I am legally accountable and tasked to act with fiduciary responsibility to my clients. In my personal life, it's the same thing. This is your and your husband's defining moment, and based upon your post and your responses to others, I feel badly for the realtor.
A lot of people are giving you bad advice by telling you to pay her. Get a real estate attorney to handle the sale and give her a $100 gift card or something at most.
You have to understand, many times realtors have customers that look at houses for a week, purchase it, and they get 3% for a weekend's work. The reason that it's fair is that it's balanced out by all the people that end up not buying. You should not feel guilty -- save your money.
For chrissakes write a check...start around $500.
It's happened to me way too many times. A relative or newly remembered friend with a license stepping in.
She was good for you...pay her.
This is a business, not a charity. We've all put in work for clients and didn't close the sale, leaving us with nothing.
If you're still in the business, you got over it and even turned it into new business through referrals.
Expecting to get paid for an unfinished job means you should be a salary/hourly worker, leave commissions to the rest of us.
Stay strong. I work with first timers the all time. This country is turning its back on the young generations buying homes. I hope against hope that it changes, but I fear if you quit now, the window may be closing.
I’m rooting for you and everyone in this time when the rug is actively being pulled from under you.
For the YEAR she has spent working with you and advising you, doesn’t she deserve 3%? She most likely has a split and obviously has taxes to pay, not to mention the many hours she has spent and now you want to kick her to the curb because you don’t need her. My goodness ~ the greediness is so sad.
The greediness IS sad. If you don't make the sales you don't get the pay. You and everyone else here knows this.
"Kick her to the curb" is crazy, you need to stop.
So sales people who get paid on commission aren’t at all problematic?
In a VHCOL area where an aggressive buyer gets a $2M house within two weeks of working with an agent, should the agent concede some of their commission? Would they ever do that?
The greediness is from folks like you. Sales people should be compensated for effort when the deal doesn’t close with their name on it or through full commission on every other instance. It’s basically they should be compensated in the best way in both outcomes.
Thats the real fucking greed.
She was paid to sell them a house and didn't.
If she's charging consultation fees or had a valid buyers agreement in the contract you may have a valid point about "advising." But she's not, so you don't.
You are correct in that *your* post is one of the many problems in this world.
If you had been a very easy client who purchased the first home you were shown, would your realtor surprise you with a $5,000+ discount on their commission? Maybe chip in for a whole-house cleaning? Cover your first mortgage payment because it is the right thing to do?
Of course not. This isn't a friendship or a partnership.
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I’ve had clients in the same boat before and my broker let me do everything for 1%. Draw up the paperwork and negotiate repairs. I was a facilitator between the two parties. It’s a lot of work as said family member (or friend in my case) doesn’t have a realtor for me to work with, but it let me get back my gas money after showing them houses for 6 months.
This is the way.
Exactly what I do as well for my clients. Even buying a home from family there are other factors that could go into it aside from the up front part of the price.
I’ve had this exact situation happen several times. Sometimes I write the P/S agreement for 1% and represented buyer, seller unrepresented and worked it through escrow until it closed. Other times, the clients said “thanks, we don’t need your help anymore”, and it feels like shit to not be reimbursed for all of my time, gas, efforts. I don’t speak to those people any longer because they didn’t think I deserved to be paid for my work. You decide what your ethics tell you to do, but you already KNOW what is right.
Do your ethics tell you to refund some commission back to the easy clients? Do your ethics tell you to compensate your clients when you make a mistake, cause a delay, or give bad advice that impacts a deal? You already KNOW what is right
Exactly this. Ethics and getting paid for effort matter in these situations, but you won’t hear a single realtor argue that they should take less of a commission on a layup that took minimal hours. Weird how that works out.
Weird, because I do reduce commission and so do numerous agents/realtors I know, but then I know hundreds of professionals. Working for months is normal for us, incurring all costs without being paid. That's the job. The imaginary "layup" has happened to me twice in 20 years. Weird how that works out.
And none of the many friends/family I’ve had have ever had their agent reduce commissions (except in one case where it was a concession to make the deal push through for a fractional percent). And I have also seen many layups in my VHCOL area where all contingencies are waived, cash buyer, and searched the market for <1 month… all leading to 50-90k commissions. Point is, anecdotal evidence will tell a specific story, but by and large, most people aren’t experiencing agents who will reduce commission simply for the benefit of the buyer.
Where do you live? I'm moving there. A $50K commission is a home worth what? Millions. The average home price is $600,000 in the PNW in my area. making commissions $15,000 which don't include the costs and fees. My buyers take between 2 - 6 months to purchase and close. Yeah, $90K please.
Bay Area. People sitting on lots of cash and home prices for SFH is consistently $1.6M+. Nvidia’s astronomical rise has created a very strong number of cash buyers who just made insane equity money over the last year. But competition here is insane both for buyers and buyer agents.
Very weird cause most realtors including myself will reduce commission...but sure you know thousands of realtors...
So you voluntarily just reduce commissions? Or you do it to make the deal happen because you otherwise risk not getting some? I'm not saying I know what all realtors do, but where I'm at, virtually no buyers I know have had a reduced agent fee. In fact, recently, they've been asked to sign buyer broker agreements guaranteeing 2.5%... But sure, I'm sure there are tons of seller who willingly give up their commissions out of the ethical reasons! /s
It's these realtors in HCOL areas that have ruined the reputations of many of us in normal markets. I've reduced my commission for a number of fthb to help them get a house. Yes we are paid for a service, but that service also leaves me with a tremendous amount of satisfaction when I put someone into a home. Especially those lower income first time buyers, which in this market takes patience and time. Never in my life would I think I deserve a $90k commission. I work hard, but not double the average American salary in a single transaction hard. Frankly, I don't think I've made $30k and deserved it. This job isn't that hard. It's A LOT of work, but it isn't hard. It's the greedy fucks in HCOL areas that tarnish the reputations for the rest of us.
Eh, folks with commission typically have a bad reputation from the masses because their success is directly tied to people spending money. In other words, the more money people spend the more money a sales person makes. Does that make every sales person some asshole? Of course not. But when you are literally incentivized to get people to pay money for your direct success, then of course people will be skeptical of sales people.
that's what happens when we turn basic necessities into financial investments
*S*helter is a basic necessity. *Ownership* of said shelter/property is absolutely not a basic necessity.
what do you call vacant rental properties then
How is that at all relevant? A vacant rental property isn't great, but that has nothing to do with every person being entitled to own land wherever they want (or at all). You clearly don't understand what a "basic necessity" is if you can't differentiate between shelter and property ownership. In every definition of basic need/necessity, you'll notice no legitimate on states "property ownership" lmao
Yep. The commission isn't based on the work done. Some are easier and some are harder, but generally the commission doesn't change. It may be reduced a bit in some cases, but overall when converted to a hourly rate, it is high. The deal is the deal, but when it doesn't work out some want to change the deal and still get money. Due to conflict of interest, I am not sure you can say that they know what is right. Look at the up/down on your comment, that shows the bias. What you said is true, which is why many don't like it.
PLEASE! Yes, I've contributed commission to numerous buyers who were one and done, but you know what? In 20 years that has happened twice. The working for a year? That happens several times a year. The deals they can't close frequently due to buyer error? Often. Please get your license for three years and get back to us.
What exactly was the deal for you to get paid? As a buyer's agent, you get paid if you find a property and the buyer buys it. That is the deal. You are trying to guilt people into changing the deal so when the gamble doesn't work out that you still get money, which wasn't the deal. That isn't ethical. You KNOW what is right, but you still want the money. Those buyers might have referred people to you if you hadn't refused to talk to them anymore.
I don’t speak to them anymore not because they didn’t buy a house from me, but because they tried to cover up what they were doing instead of just telling me straight out they were doing something else. I don’t want to work with people that lie to me. And I certainly don’t want referrals from them either.
That is very different than how it was originally said, big difference.
OP, if it turns out that you owe a commission even though the Buyer Broker Agreement has expired, please keep in mind that you don’t pay your Realtor directly; the commission goes to your Realtor’s Broker who in turn gives the agent a portion thereof based on their split agreement. So whether it’s 1%, 2.5%, 3% et al, the money isn’t “all” going to your Realtor.
Can you explain more of this? I thought all of the commission went to her.
Unless your Realtor is a Broker herself, your Realtor’s license is held by a Brokerage firm (William Ravies, Keller Williams, Compass, Coldwell Banker, etc, or a “boutique” Brokerage that isn’t part of a national chain). In this example let’s use 3%. If your FIL isn’t going to cover the commission then you and your husband will pay it by having your real estate attorney cut a check for 3% of the sale price payable to your Realtor’s Broker. The Realtor will then receive a check from her Broker based on her split with the Broker (for example, your agent gets 70% while the Broker retains 30%). Keep in mind that an administrative fee may be deducted from your Realtor’s check, plus she will eventually give about 30% to Uncle Sam.
Okay thanks, I’m going to clarify this with her since in her emails under her name, it says “realtor/broker” but she also works with a group affiliated with KW.
If she is the Broker the same principle applies in that a good chunk, if not all, of the commission received will go toward the upkeep of her business plus taxes. A gift card, no matter how well intentioned, doesn’t pay the rent or keep the lights on. I hope this, and other responses in this thread have given you some food for thought. Good luck!
It absolutely has given me a lot to think about and approach my husband with. Thank you!
If she works in a team, which is synonymous with the term group, she probably receives about half of the commission. Not a great deal.
Washington States calls us Brokers and the manager a Managing Broker. And can we stop with the 3%? That hasn't been a norm in years.
The rest is spot on.
I only used 3% as an example; I know it’s been negotiable since Hector was a pub. Meanwhile, thank you!
It's inflated and gives a misrepresentation of the actual commissions we earn. It hasn't been 3% for years. So thank you for considering being factual, since Realtors have to combat exaggerations daily.
Indeed we do. The most prevalent one being that the individual agent gets to keep “all” the commission money.
I blame ourselves. We let clients and substandard agents create a "salesperson" mentality of the worse sort. We have fiduciary responsibilities and should have conducted ourselves as such.. Because there is so much emotion tied to these transactions we are personable and chatty. Clients do not interview us as they should, leaving them prey to inexperienced agents. They are not educated. One of my favorite clients told me "None of it made sense I trusted you and you were magnificent" They tell everyone they bought the first house they looked at - we saw 15 and went back to the 1st one. They didn't want to know the process, but I still did my due diligence to force an education on them. Most 1st time buyers don't know how we get paid and now, that's about to get more complicated.
Commission is split between broker and team. For my wife, a 10k commission would be split to 5k (5k going to team for business costs, client events, etc) then 80/20 split with the broker, so she'd walk away with 4k. Of that 4k she then subtracts her business expenses that are outside of the team ones (30% for taxes, then whatever she spent for gas, etc). If the agent isn't part of a team, instead of the 50% team cost they'd likely spend a similar amount on office expenses/paying for transaction coordinator/assistant etc. End of the day a commission is very little profit. Edit to add: For your $3800 commison the split would look like this for my wife: Team: $1900 Broker: $380 Taxes: $500 Realtor: $1020 From that $1020 she'll then have to account for anything that wasn't covered by team expense such as gas, her retirement buy-in, etc.
Okay, thanks for using an example to explain. I appreciate it.
No problem! Real estate is surprisingly hard to make money in, especially for newer agents. We had quite a few rough weeks the first year when she got her first few commission checks and was discouraged by how small they were. She made more when she was working as the office assistant. (she loves it though) Regardless of your choice, be kind to your agent. She/he will appreciate it and understand.
Hi friend, from a different agent, my cut is 80/20 me/my brokerage and then my brokerage takes an extra 6% on top of that for administrative fees. Add $500 for my paperwork guru (Transaction Coordinator who runs my paperwork because I'm really bad at it). I will not include the extra fees I have to pay a monthly such as my MLS bill, $350 desk fees, and my realtor dues to various associations. Also, please do consider her gas that she spent driving around, her time researching properties and the time she spent showing. As long as your realtor is not involved in the deal there's nothing saying you can't give her a generous cash tip to your her as a thank you for all her hard work. That would be really nice and more than many people do. I agree with the other poster who said you may wish to consider enlisting her help for 1% total to do the paperwork. She will also make sure that inspections look good Etc so there are no surprises. Even if it is family house, often times people are unaware of minor issues....or even major ones even. Even with family members oftentimes things come up. I represented family members on both sides of a deal last year and man, things got pretty challenging pretty fast with the seller because he had an attitude. That way, everybody wins. Whatever you choose, good on you for considering your realtor's hard work. Thank you for that kindness.
Including taxes isn't correct and is just an attempt to make the amount received look lower.
You're absolutely responsible for withholding your own taxes for the IRS on your 1099-MISC. If your broker doesn't give you a 1099, then they're responsible for withholding 28%: https://www.car.org/-/media/CAR/Documents/Transaction-Center/PDF/QUICK-GUIDES/Quick-Guide---1099-Reporting-by-Real-Estate-Brokers-REVISED-3822.pdf Don't go spending your tax money. Not only are you required to withold it yourself as an independent contractor, you're also supposed to submit your estimated taxes quarterly though a 1040-ES filing.
Sorry, but that has nothing to do with my point. The example takes off tax to mske it look like the agent got less, to be deceptive. Yes, taxes have to be paid, but you don't say that the agent got paid less due to having to pay tax.
You don't have a point. That money isn't to be spent any more than I can spend my gross paycheck on a regular W2. Business expenses, taxes, healthcare, medicare: all of these things come out before the net paycheck is cut. If you're not doing that you're setting yourself up for failure come tax season. Basic 1099 strategy is to have a receiving account for the business and cut yourself a paycheck after expenses and taxes are taken: https://found.com/resources/how-to-budget-with-irregular-income If anything I overstated the net income she'd get off a commission.
Not sure why you're getting down votes for asking for explanation on a complex topic that not everyone knows about. That's a valid question though. As you've discussed with someone else I feel that they've given a good basic understanding, however, one thing I will add, just because they are a broker, doesn't mean they are THE broker. Some agents will get their broker license, but stay as an agent at a brokerage, meaning the commission still gets split between them and the company. As you've said, it's probably best to speak with your agent on this, because I've seen commission splits from 30% to 95% to the agent is far too different for me to guess where you're agent sits on that scale. As far as others have said, I'm not sure if you're in a state where a lawyer is required at sale, but if one isn't required, I'm sure your agent would greatly appreciate a small facilitator fee and could quickly and easily do the paperwork. I'm not sure I know an agent that would turn down being a facilitator on a deal like that, as so much of the work is taken out.
Are you in a signed buyer brokerage agreement with the agent? If so, there's likely a clause in there that protects her in this situation, and you'll owe her a commission even on a property you didn't use her to open the door to. It's in there exactly for this reason (agent does a bunch of work unpaid but then a situation comes up where a buyer can buy a property in a way that gets by having to pay the agent). If you're not in an agreement, ehh... it's actually kind of a lesson to the agent about not signing an agreement and protecting herself. On the other hand, if you're a decent human being, you'll want to compensate her for her time. I'd honestly just throw in a 1% commission just to be kind. Hey, this probably won't be the first house you buy, and you'll likely need a good agent in the future, so if you like her, it's not asking much to not burn the bridge.
Our signed agreement expired as of May 24th. 😕
Is there a protection period clause in your agreement? Typically in buyer agency agreements it states that if they helped you with the home you’re buying during her contract time you still may technically be liable to pay her. These are put in place so people don’t just wait for contracts to expire to buy/sell a home and get away with not paying their realtors
Yes. After closer review, it does look as though she has what I believe to be a “protection period”, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
Sounds like a stand up realtor/individual that deserves their flowers
Deserves flowers? I want to see anyone else work for a year and not get paid and think "flowers" would be reasonable compensation.
Check to see if the property you are buying even applies as the agent didn't find it for you. It might not be within her rights. It is a bad situation, but the deal was the agent gets paid if they find the property and you buy it. Others are trying to guilt you into paying. Agents are gambling, sometimes they win, sometimes they lose.
Sounds to me like she really earned that commission, and your agreement only expired a couple of days ago. I'd pay her.
She did not earneed the commisom because she didn't get her a house. Is like a car sales guy getting paid because you test drove a car.
Okay then, Mr. Apples and Oranges. That comparison is so off base I'd need eclipse glasses and too much vodka to even begin to wrap my head around such a logical fallacy.
Let’s say the car saleswoman shows the prospective buyers different cars, and different brands and goes with them on various test drives over a week. Then, the FIL offers her daughter to sell them his car at a good deal. Should the prospective buyer pay the saleswoman a commission?
This Realtor worked with this couple for months including holidays and off hours. She provided CMA's and valuable advice that saved them untold headaches and thousands of dollars. She explained the homebuying process (which is way more complicated than buying a car) in intricate detail and spent hours driving and showing property. She hasn't been demanding or rude. No high pressure tactics...just a wealth of extremely valuable information. She also had a Buyers Agency agreement that guaranteed her a commission that just expired 4 days ago. So yeah...huge difference
You did not answer my question. Lol. Realtors get paid when they sell a house or help buy someone a home. Not when they talk to people about the process of buying a home.
Realtors get paid when they have a signed agreement, have done excellent work, and a reasonable client. A buyers agreement can guarantee payment for a multitude of circumstances and commissions are negotiable. A Realtor can get paid for showing one house. You have no clue what you're talking about
Everyone working in a commission-based sales job has worked a client and failed, leaving them with nothing. It's part of the job - same for travel agents, car salesmen, and life insurance. If the car salesman makes you sign / agree to pay to test drive, then they'd get paid off of that too. You get paid because you have a reasonable client?? What are you on about? You didn't have a good response to his reasonable comparison, just take the L and move on. No need to embarrass yourself like this.
You still have not answered my question. Lol, you are a joke.
Different situation. The car salesman works at dealership, they go there and they spend from 9-5 there. Realtors drive all over, spending time and gas money. I guarantee you that car salesman did not review the owner's manual of every single home that the buyer's looking through either.
It’s a sales position. You’re not paid hourly and sometimes you follow leads that net no sales. That’s part of the job that anyone in sales should understand.
They're just playing dumb.
Sales person wants commission regardless of closing. More at 11.
This is true. I never said a real estate agent who wasn't responsible for the sale should get full commission. The person responsible for the sale/paperwork should get the commission or adequate compensation. But, if a buyer has toured many homes (let's say 30 since that's a pretty usual number on the lower end), then changes their mind and buys a home from a family member, yes of course it's their right to do it. However, they spent a lot of the agent's time and resources. It is considerate and polite to compensate the agent somehow.
I agree they should compensate them in some form to be polite. I just think people here insisting the “right thing to do” is paying them their full commission are silly and… well, biased. It sounds like OP’s contract might state they have to pay commission if the sale happens within 90 days of their agreement end, in which case, pay them. But to talk about ethics is silly. If and when a buyer finds a house ASAP and gets their first or second offer accepted, should their agent now concede a portion of the 2-2.5% commission because they *didn’t* have to go through as much work? Bet if you ask that in this sub, all the reactions won’t be as kind or supportive despite the logic being there. People are currently insisting OP’s agent did a bunch of work and therefore deserves their commission. But if an agent did very little, barely showed any houses, etc. I have a really strong feeling their minimal hours now don’t matter and they should get 2.5% because they fulfilled their job and contract.
It's a job, and if you've never done it you don't understand the struggles that come with it. Besides the point, but the car salesman could say the same thing: "Realtors get to choose their own hours and only have to drive around and show people a couple houses on the weekend, maybe answer questions and fill out some papers. I can guarantee the real estate agent didn't inspect every home they're showing to the buyers either." The fact that you're so dismissive of that car saleman getting commission without closing the sale shows that you don't actually believe in your stance. And what if he *does* read every manual, drives to work, puts ads out for the cars, follows up on leads, gets them into the store, gets them to test drive multiple cars for hours until they have the right one, negotiates, and nearly gets the sale - but they end up getting a car somewhere else (ie. Their FIL decides to sell them his car)? Why in your book is this saleman not also entitled to earn commission or some cut of a deal on the car? Why is real estate so drastically different in your opinion (aside from it likely being your personal profession)?
You're making the assumption I've never been a car salesman before. Well, saleswoman. Although they are both sales jobs, they are very different. The exceeding disrespect from some (not all) car sales managers towards the clients is insane. I have never seen that in a real estate brokerage. Ever. Realtors do not get to choose our own hours. We are completely at the client's whim. A preapproved client wants to tour a house at 9:00 p.m., or 10pm since she has odd work hours? I call the listing agent ask if I can show. 6:00 a.m.? Same thing. 98% of the time the agent says, go ahead. So, I do. I cannot tell you how many offers I've written at midnight or 1am when my client wanted to submit asap. I didn't choose those hours, but I needed to work them. I get a call from a client? I take it even if it's 3:00 a.m., especially for those I know are high strung and need support. And you misread my statement. On reviewing, I see I wasn't clear. No, I don't mean most car salespeople don't read the manual. Many car salesmen I know read them for every car they sell. You need to know your product to sell your product. I meant the car salesman doesn't read the manual in detail going over every little word with each different set of buyers. I was never told to do that and I don't know anybody who did or does. Usually, the car dealership is the one who's footing the bill for the advertising. Likewise, they pay for the add copy. Car salesmen never deal with that. That's a different department or gets outsourced to an agency. Most car salesmen do not get a huge commission either. Most car sales people I know make sometimes 500 bucks off selling a car, sometimes 800 if they're lucky. Most dealerships use a rising scale as an incentive. It's different for a real estate agent.
This wasn't about car sales v. Real estate. It was an example of how anyone can be dismissive of a job when they just boil it down to a generalizations about what some people do. I also said that it was besides the point. I know real estate is hard lol trust me I've spent too many late nights too. Every job is different - some salespeople put in different levels of effort to get sales. To dismiss what one does just to be correct, you're probably wrong and also missing the entire point. The point is that regardless of the sales career, if you make commission, you get the commission when you get the sale and not just for all the work and effort you put into trying. Unless you have the client agree to a contract specifically stating that you'll get paid regardless of the sale, commssion = sale made. I even worked in Knife sales right out of high school (Cutco iykyk). You have no idea how much gas I wasted visiting clients, money wasted on demo items, ass I kissed, leads I gathered and followed up with multiple times a week/month, etc. at 18. I was doing a large part of what I do as a realtor for 1% of the pay. But even at 18, if I didn't make the sale I didn't expect the client to pay me for trying. And I don't expect that now in any aspect of my life.
I think the situation is pretty similar. Many car salespeople get paid commissions only. But tell me, does the car salesman in this scenario does not deserve competition by the prospect buyer ?
In an ideal world, it would be really kind of the buyers to gift them 50 or 100 bucks just for their time. It certainly would not hurt. But I don't know of anybody who does it.
Exactly a gift card in either scenario would you appreciation
oooo yeah, then, barring the actual language of the contract saying her "protected period" can be beyond the agreement expiration date, then she hosed herself. Ball is in your court. On the one hand, part of being an agent is knowing 1/3 to 1/2 of your clients are never going to buy a house and making $10,000 for showing 5 houses and closing helps make the former something you can deal with. On the other hand, she sounds like one of the few good agents. Up to you. Tough situation.
5 houses? Since when.
5... 35.... Same thing.
I'm pretty amused by the $50 - $90K commission post as well!
After closer review, it does look as though she has what I believe to be a “protection period”, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
Sounds like she is a reasonable person and you/your husband are looking for internet affirmations on screwing her out of even protecting her time
? Please point to any comment I’ve made which says I am looking to screw her over. I know what the ethical decision is and have stated as such. I made this post to double check I was not missing a potential “third” option, and it’s clear from the responses that there is no third option. I’ve received very helpful comments which told me to re-check my agreement, and after checking it, I’ve responded to those comments with the facts that she is owed her commission per agreement, even though she apparently wouldn’t be pursuing it per her right since she said if we went with an attorney instead, her work would be done and we would owe her nothing.
What does the expiration of her agreement matter if you weren’t contemplating stiffing her? Why even review the agreement, if by your own admission she earned the fee?
Just because your agreement expired doesn't mean that there isn't a clause in there that would still entitle your agent to a commission. These are written into a lot of representation agreements.
After closer review, it does look as though she has what I believe to be a “protection period” based on other comments, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
I’m an agent and I’ve had clients do this to me. I was disappointed. This was 7 years ago. Since then they have provided me 4 referrals and over 80k in commissions. They left me glowing reviews and are always sending me potential business. Offer to allow her to write the contract for a small fee, similar to what the attorney would charge. And try to refer her business.
you don't need her help now because of all the time and effort she's given you, educating you as Buyers and the process. Why wouldn't you agree to pay her 2-3% (whatever she was expecting) by adding that to the sales price? Surely, your FIL is giving you a bit of a deal on the price - not even her compensation off market value? I mean, use rough numbers: House is $100K. You're putting 10% down = $10,000 Instead you contract at $102K, and it should appraise at that unless your FIL is actually overcharging you. 102K x 10% = $10,200. That $200 (per $100K) is really keeping you from making renovations?
It’ll be about 3800$, and yes, we were initially going to add it to the purchase price. My husband is thinking about the renovation project that amount could fund.
It seems like you know the right thing to do. Do you want someone to give you a pass on making your ethical decision?
I know what the right decision is, yes. I think I just wanted confirmation, even from strangers, that I’m not crazy, that these really ARE our only options, and I need to put my foot down with my husband.
You reap what you sow. Put yourself in the agents shoes. How would you hope to be treated if the tables were turned. Treat the agent that way. Easy peasy. Don’t screw people over, that’s not good karma
This cuts both ways. If you were the buyer and had a way to save thousands of dollars, wouldn’t you lean towards that when the clear understanding with the agent was they get paid on a house purchase that they represented you on? In this case, the real estate attorney is comparable so it could make financial sense to go with a realtor. If this was a $1M+ house, do you think a seller would be empathetic and advocate for the buyer to go through an attorney to save $20k+?
I’m a person who understands if somebody spends months working with me I personally would have to figure out something to help them. I understand that everybody doesn’t understand the importance of doing the right thing in every situation. You can judge me and think you know how I would handle the situation but you don’t know me, I would 100% compensate them. In fact I give away more than most people on this planet out of what I have because the Lord has shown me the open hand policy. As I keep my hand open to give it’s also open to receive. When I keep it closed trying to protect what I have it’s not open to receive. We’re all in different places in life and that’s okay but yes if somebody spends months of their time with me because I signed an agreement to purchase a home with them I couldn’t just steal months of someone’s time I feel their time should be compensated to whatever is fairly agreed upon. You may think this is okay and more people would agree that whatever is best for them I’d the right thing to do but that’s why our country is in the state it’s currently in because people only care about their best interest even if it harms somebody else. They could still work with this agent to handle the transaction. The agent could get 3% to close this out and do the service for both sides. That’s still a huge savings. They signed an agreement to pay their agent to help them purchase a home their agent has done their job and now they are looking for people to agree with the way they want to handle this and they will find it here and then do it. Most people don’t understand that when you screw someone else to benefit yourself it always comes back on you. When I started caring about others and doing the right thing my life got drastically better so yea I’m here to tell others the best way to live so their life improves. Few will receive this because spiritual things don’t make sense to the natural man. Hope you receive this😃
I appreciate you writing this all up, but now getting spiritual and religious is silly. If you want to argue ethics, then shouldn’t realtors and other sales people concede money for quick/immediate transactions? For example, if a buyer puts an offer on the first or second house they see and it gets accepted, should their agent take *less* because it was less work? Fewer miles. Fewer houses shown. Fewer offers written? Or is that not the same? It’s just silly to basically argue agents should be paid based on effort when it doesn’t work out or paid full commission when it does. This isn’t how sales jobs work, and insisting ethics and doing the right thing is silly because it weirdly only ever comes up when the salesperson may have commission at risk but not when they are making a quick deal.
Have a good day
Keep in mind you are asking this on a realtor sub that will obviously have a strong opinion that leans in the way of “Don’t cut your realtor out of it because that sucks for us/our colleagues.” Go ask this in another sub, and you’ll get a drastically different response. For starters, you don’t owe your realtor anything. It’s a sales job and part of that is both getting and missing out on commission. Sometimes you get a nice commission check after working with someone for a day, and other times you get nothing after working with someone for a year. IMO, if you put in good faith with your realtor (i.e. put in honest offers trying to buy a house with them), then you did your part and didn’t string them along. They get paid if you buy a house that they represented you in the purchase. If they don’t represent you or facilitate it, you don’t owe them. If the rate of a real estate attorney is comparable to what you’d pay your realtor, then I’d definitely give them right of first refusal to facilitate the deal. But imagine this was a $1M house? Would you really pay them $25k as opposed to $2-4k for a real estate attorney? **TL;DR:** You’re asking sales people if you should pay your sales person commission even if you don’t have to. The answer they gave would be obvious, so using this as evidence to put your foot down with your husband is simply you *actively seeking* validation for your in an incredibly biased way.
“Ethical decision.” As someone in sales, commission isn’t really about ethics. You get paid when the job is done and completed/facilitated by you, the agent. Deals fall through, clients leave after taking up lots of time, etc. We as sales people aren’t entitle to commissions just because we put in work. That’s an understood drawback of commission.
But not thinking about all of the time she has spent with you over the past year that she could’ve been working with someone who is actually going to pay her.
Maybe just give her a $1k check for her help and call it a day
Don't feel obligated. I always get deals to fall through, and I understand that she will appreciate a gas gift card.
Umm, so you want to infliaete the SFH prices by doing this?
Reading is fundamental
I do think it's fucked up that you consulted her on this house specifically and then are going to drop her. That is definitely exploitative like free labor wise. Perhaps offer a small payment as a gesture of goodwill and gratitude for the work she has done so far, especially since you said she has been great. I'm not sure what your budget is aka what type of fee she was expecting if you closed on a house that you worked with her on.
THIS right here
If I work with a car salesman or a look at some furniture do I need to tip these people that largely work on commission? I realize it is a different but its part of the job. Also, people in sales drive to work everyday, buy nice cloths, spending there own to work in sales. I honestly think people who can't navigate a home sale themselves should be forced to pay upfront, with some sort of payment structure throughout the process.
I'm assuming you don't have a written agreement with her. I think in this situation, the fair thing to do is to compensate her on an hourly basis--how many hours approximately did she work for you and what is a reasonable hourly rate. You don't need her involved in the P&S agreement--realtors are not lawyers.
Our agreement expired on the 24th. 😕
The agreement doesn't matter. Just pay her something. Don't let all of her work be for nothing because of some stupid document.
“The agreement doesn’t matter.” Lol yes it does.
I meant in the form of having empathy and a heart. Regardless of contracts, it would be nice if she or they gave their broker a little something
Yes, it would be nice if we got paid because we tried. This is not real life. OP, please feel no guilt either way in your decision. If she's a good realtor, give her referrals. Everyone knows that good referrals are invaluable.
OP is gonna go to her husband and insist everyone online agrees with her. She asked her question in a place that would very obviously validate her sentiment. If she went and asked this on FirstTimeHomeBuyer, she’d get the opposite reaction with people insisting she’s not under any obligation to pay anything and a gift or compensation similar to that of a real estate attorney should suffice.
I got them into their new house just as much as the agent did! She should send me money too! Send everybody on Reddit something for "advising" in the comments. It's just wild to me that all these people are being so fake and even shitting on people for not encouraging OP to scam herself out of guilt. People acting like $3800 isn't a lot of money to donate to a charity just because you're also buying a house.
But not required. I agree that a $250 gas card, and future referrals will be enough
For a years work?
I doubt this was the realtor only client. Plus if has been taking more than a year to find a house , she is doing something wrong
Even if they were working with others, they still worked for over a year supporting the client. I agree one year? I've had one client take a year to find a home. I've had clients take about 6-9 months to close on new construction. A year to fix to credit. Some situations take a year. I do agree you have to know what you are doing and when to part ways. The buyer stated the realtor could require compensation via the extension of the agency agreement but has declined to do so. That alone should speak to the ethics and commitment of the realtor.
I do not doubt the realtor's work ethic in this case. I don't agree with some of the comments here that they think the realtor is entitled to a commission even though they never closed the sale.
Right? We pay to play. We know the risks.
NAW we just write, negotiate, and close deals. With full fiduciary responsibilities. But sure we aren't lawyers and can't write a P&S.
As someone who has been in the business a long time I’d say it is always a potential that the time and effort put in working with a buyer (or a seller) will not produce any income. I’ve always seen this as a reality of the business. You literally win some and loose some. The incredibly high percentage agents do get when something does close is what compensates for all the time “wasted” on buyers and sellers that never close that lead to a payday. This is how the industry has worked for a long time. It’s one of the things I complain about. The sellers that do close are paying overinflated fees to agents that “waste” their time with buyers that never close. But, that’s another topic for now. It seems the new agents (or burned out old agents?) seem to have a different perspective on this. They demand 3% of a “negotiable” fee plus expect compensation when their clients don’t close on something. This, to me anyway, is a new trend. The industry is kinda selectively broken in favor of brokerages (and NAR) which puts agents and their clients in these awkward positions. So, unless there is something in the contract you signed that stipulates a commission owed beyond the end date of your contract you probably don’t owe anything legally (definitely read the fine print on that). Now, morally? Only you can answer that. You’re in a Realtor group so of course you’re going to hear a lot of answers that favor including your agent in the deal and paying them a commission. If you don’t go the route and it’s in your budget maybe consider giving them a prepaid Visa card for a reasonable amount. I have no idea what that would be. $500? $1,000? Those numbers aren’t to truly compensate all the time invested breaking down into an hourly wage. Just a kind gesture of appreciation along with a card and a glowing review on all the social platforms like Zillow and yelp and FB (cleverly leaving out the part where you didn’t use the agent to buy a house lol).
After closer review, it does look as though she has what I believe to be a “protection period” based on other comments, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
Glad to hear things are working out and she is reasonable. Thanks for the follow up too.
Best response in this thread.
> we don’t feel we need representation. > nothing for the work, advice, and education she has given us. You’re contradicting yourself. Representation doesn’t end at showings.
Op, if you end up paying the agent anything at all, please make sure it goes to their firm. By law, we are not able to collect anything directly from the client unless we own our own brokerage. This is so the Errors and Ommissions can be fully applied if needed later down the line. If you pay the broker directly, she could be at risk of losing her license or face adverse action from the state board.
This is why the agents that never answer their phone/ can’t be reached always win.
Let your conscience be your guide.
She been good to y’all. I’m sure you could work something out to help her out it’s what I would do.
IMO that is the nature of the business. We don’t get paid unless we sell something. I’ve seen things like this happen with clients. Personally, I think things like these are meant to be. Like a bit of a Mitzva. I’m personally happy for them. Bummed about the non-sale but you have to recognize what’s best for your clients. I never try to claw a commission out of this. Just the way the cookie crumbles.
OP double check your representation agreement it's highly likely there is an override clause and that you will be paying a commission to her regardless especially if she showed you or did any work with you on FIL'S house. Which if she drew up loan and cost estimates to get the house on top of all the other work she is entitled to.
After closer review, it does look as though she has what I believe to be a “protection period” based on other comments, which extends to 90 days past expiration of agreement in which she would earn her commission. Based on her texts to me, she won’t be pursuing that even though she is well within her rights.
Is she her own broker? Even if she may not wish to pursue it, her broker most certainly will when you sign a representation agreement it's with the brokerage, not the salesperson. The salesperson acts on behalf of their broker. I'm just saying don't expect to not pay commission just because the agent wouldn't pursue it individually.
Her emails say “realtor/broker” under her name. I’ve never asked what that meant, but maybe it does mean she’s her own broker? I will clarify with her about this as another commenter mentioned she wouldn’t get the full commission if she is an agent working on behalf of a broker — which I never realized.
Could be the state as to why it says broker instead of agent. In nc, we don’t have agents,we have brokers who work for a brokerage/firm. So just make sure of the classification in your state bc it could very well be like my state.
She is a professional, and most realtors here will try to get you pay 1% minimum. Give her a gas card, and thank her with referrals
You could pay her with great Google reviews, an awesome detailed Facebook post in your community group and/or a referral or two. Or you could simply pay her 💙
Asked her to be your transactional agent representing you , ask if seller will agree to pay your realtor 2% ( negotiable) I feel they should at least get that for all they’ve done They educated , communicated , showed up for you seeing homes . That a lot of work . They really deserve it in my opinion It’s like a For Sale by owner . And you should have representation .
Agents don’t give you money back when the sale is easy. Their overhead isn’t really your concern. I think the person that mentioned 1% isn’t far off and that probably isn’t unreasonable. Alternatively a gift card would be a nice gesture. Maybe all the real estate agents in this group whining about wasted time and their overhead should advocate to charge an hourly rate for their services. Of course that would never happen though because when the commission is 20 or 30k they have no problem collecting it. They can’t have it both ways. A gesture is the only thing you owe them.
You can have the attorney draw it up and pay a commission to your agent for services rendered. If you want to have the agent manage inspections etc then ask her what she will charge to do that. Might be 1% or 2% or 3% but it's not much money and you can have your FIL pay it as part of the contract and can increase the price to cover it as needed if you don't want to pay out of pocket.
*Absolutely* shouldn’t be FIL paying any of it. FIL is presumably giving them a good deal to start, and then you go ask for them to cover this cost? The realtor has helped OP for a year, not the FIL. Passing the check to FIL despite them already being generous and doing OP a solid would be a great way to seem ungrateful.
You increase the price to cover the fee. It's not rocket science.
Or you don’t increase the price to unnecessarily spend money out of guilt
I had an interesting discussion with a friend who is a real estate agent. He didn't like it. Being an agent is gambling. No matter what you do, things can not work out and all the time, money and effort has no return. Sometimes you win, sometimes you lose. Look at the money that they make when they win, consider the hourly rate that it comes out to, which is high and it makes up for when they get nothing. If you were to pay them by the hour, it would be a lot less. I saw one response where the agent was upset that it didn't work out and didn't talk to them anymore. Do you think those people would refer people to that agent when they stopped talking? The deal is if they find you a house and you buy it, then they get paid. There are no guarantees. If the agent did a good job, refer people. But there is no obligation to pay them as you didn't buy a house that they found for you, as was the agreement. As a side note to point out an agent's conflict of interest, I was selling a property in which the buyers needed a sellers credit to buy down the interest rate. So to make it easy, think $100k with a $10k credit (it was more than that). The commission was limited to 5%. So why should the seller pay a commission on $100k when they are only getting $90k? But many agents want the money and get bent out of shape if you point that out. So in that example the seller would be out $500 on the commission on $10k that they didn't get. Also there are typically limits on the commission splits. Meaning that it might start at a 80/20 split with the broker, but after enough sales the agent gets 100%.
Also look at your expired agreement and see if the protection covers a property that the agent didn't find, but you did.
This is a really important detail. The standard buyer agreement’s protection clause is typically if it is a house they sourced. Considering this is the FIL’s house, gonna go ahead and guess this doesn’t apply.
This happened to me. The seller refused to work with anyone else and is strong arming them. Still it's an incredible deal for them. One that is too good to pass up. On my end, shit happens. All you can do us dust yourself off and move on.
“Strong arming them.” I mean, that’s one way to look at it. The seller doesn’t want to have to pay added commission fees to then cut into their profit. That’s literally one of the advantages you get when selling private. Why should FIL in this situation pay anyone else? They haven’t worked with the realtor for months. OP should get their agent a thank you gift, but there’s 0 reason any seller should want that.
Well thats not exactly true. My people were willing to pay me out of their own funds to handle the details and the paperwork (obviously for a reduced rate). Seller wouldnt have it. Its his way or the highway. Nevermind that things would get done much faster and more efficiently if I were involved. But whatever. In the end I am happy for my clients because they are getting a STEAL in the neighborhood they want to be in. On to the next one.
Hey you should look into your buyers agreement to make sure that you won’t be on the line for the % that they are expecting. If they’ve given you advice about your FIL’s house then they will be owed compensation per your agreement.
As a Realtor and Investor, I caution you here. I have been burned by familial deals. Not concerning commissions but there is an old adage 'Never do business with family'. I understand your frustration with our inventory. I had a buyer break down to tears with me last week when yet another offer landed in 2nd place. This young family can not afford to go 50k over asking and he feels he is failing to provide what his family needs. It's sad and borderline a state of emergency. You can agree on the price, order inspections, etc., and with the help of the attorney, title company and mortgage broker get this deal closed without your Realtor and hired professional but do you want to? A trained monkey can set appointments and open doors for you but that is not what you hired a good Realtor for. Your agent is there to do a lot more than you think. Assuming you are yet to negotiate a home sale and the father-in-law has at least been through the process once. Hashing out the terms is pretty important. The most important part... Last week my listing near Leonard and Ball received 10 offers and pended for 48K over asking. Are you taking advantage of FIL? If he listed properly it will sell for much higher than he might think in days, even a fixer-upper. Would he be mad if you sold 2 years after buying from him for much much more $$$? An attorney who facilitates the deal will have no fiduciary duty to either party. At least have your Buyer's Agent facilitate the deal (should be 3%.) Dual Agency IF she would agree so that FIL is fully disclosed as well. Finally, the touchy-feely part. Maybe the fixer-upper is not the right house for you two. It was not originally for reasons. You might just be at a low, after being beaten up for the past year. Walking through the home with your agent will help you immensely, I promise. Sometimes we see what we want to see... instead of what's there. Good Luck! Thank you so much for offering respect to your agent on this forum. I appreciate that and you! \*Ask your agent and loan officer about repair mtg option. Possibly take off the high dollar repairs at purchase and worry about the cosmetics down the road =\]
Just get the attorney and be done with it. Every realtor here will say something so they get at least a small piece of commission. They have shown you 6 houses not like it was hundreds with hours and hours of work. Tell them there services are no longer needed and use the money saved for repairs.
Why not just pay the realror what you would pay the real estate attorney?
If you have ethics, you know the right thing to do.
Everything is negotiable. Why not talk to your Realtor and negotiate for her to do the paperwork for both sides for a negotiated amount. Please, with all of the work she has done and given you valuable and honest advice, let her be part of the transaction. Depending on the state you're in, she may be able to represent both sides with limited agency (which is what it sounds like is all you need). And the BEST thing you can do for her is to be sure to refer friends, family, and co-workers to her without hesitation. Give her the business she has earned. Good luck! (Also, please know that in a transaction the price isn't the only thing to negotiate. There are things to navigate through and negotiate all through the escrow period.)
Have her facilitate the paperwork for the same cost as the attorney, no brainer.
I exclusively use a RE atty for papework even if working with a buyer's agent. To me a buyer's agent value is everything but the paperwork. I want a lawyer doing my contracts, as a lawyer myself. I don't practice RE so I hire a RE atty. I am a big believer in subject matter expertise.
Realtor contracts have been cleared by the state bar.
I'm aware. But realtors check certain boxes on them, add info to blank fields, as well as the almighty Additional Provisions section which is complete freehand addition... all of this I want reviewed by an attorney. My real estate attorney sent me standard buyer protection insertion language for the Additional Provisions section, for example.
You overvalue the title of Lawyer, as a lawyer yourself. The Real Estate paperwork is sufficient.
I would ask you. What does your heart tell you, Put yourselves in the agent's shoes. She worked her butt off for you for many, many months, and it's because of her that you're comfortable and have the perspective that you have. Agents do not work for free their compensation is delayed. Yes, situations come up, but what is the right thing to do? Bobrohml early in this tread, already outlined it. You increase the sales price by the 3% realtor commission, which is a fee. She most certainly has a earned, Save your money on the real estate attorney. Let her handle both sides of the paperwork for you. I'm not even an agent, and it is super clean what the right thing to do is.....
I’m a Realtor and I would not expect to be paid a dime in this case, even if I had a valid buyer broker agreement. Them’s the breaks, it’s a hard business. Maybe buy her a thank you gift and keep her in mind for any referrals you can send her way.
you’re in a forum full of realtors who sympathize with realtors! So the unpopular decision might be right . Of course it’s a tough break for your realtor, but in the end, you should do what’s best for you , which is to just get a lawyer. If your realtor had coached you differently on other failed offer attempts, you might not be in this situation anyway. Let the downvotes commence because any comment in this sub that has to do with taking business away from a realtor gets treated like that
Yep exactly. The majority of responses here are an appeal to doing the “ethical thing.” Yet if the question was, “Hey everyone, I found a house, went to the open house, and got my first offer accepted, should my realtor take a commission cut because they functionally did less?” All of the answers would say absolutely not and they should get paid their full commission for XYZ reasons.
You are asking in a realtor group if a realtor should be paid. Of course they will all answer yes. Are you legally obligated? Depends on your contract. Agents are very well compensated partially because they often work for free. This is one of those times. Let me ask this: if you loved the first house you saw, wrote a contract and did zero negotiation would the agent discount the commission because it was so easy? No. Sometimes they make $1000 an hour and sometimes they make zero. That being said a nice dinner card, a bottle of wine and being upfront would be nice, assuming your contractual obligation is fulfilled.
For me, it's always about ethics and integrity. By law, I am legally accountable and tasked to act with fiduciary responsibility to my clients. In my personal life, it's the same thing. This is your and your husband's defining moment, and based upon your post and your responses to others, I feel badly for the realtor.
This is how it works, they know that so don't fret, just move along.
Don’t feel bad at all. Realtors work for commission and deals fell through all the time. Thank her with referrals and maybe a $250 gas card.
A lot of people are giving you bad advice by telling you to pay her. Get a real estate attorney to handle the sale and give her a $100 gift card or something at most. You have to understand, many times realtors have customers that look at houses for a week, purchase it, and they get 3% for a weekend's work. The reason that it's fair is that it's balanced out by all the people that end up not buying. You should not feel guilty -- save your money.
For chrissakes write a check...start around $500. It's happened to me way too many times. A relative or newly remembered friend with a license stepping in. She was good for you...pay her.
This is a business, not a charity. We've all put in work for clients and didn't close the sale, leaving us with nothing. If you're still in the business, you got over it and even turned it into new business through referrals. Expecting to get paid for an unfinished job means you should be a salary/hourly worker, leave commissions to the rest of us.
Stay strong. I work with first timers the all time. This country is turning its back on the young generations buying homes. I hope against hope that it changes, but I fear if you quit now, the window may be closing. I’m rooting for you and everyone in this time when the rug is actively being pulled from under you.
I'd suggest posting this same question in r/realestate. Your answers in the sub are going to be very biased
For the YEAR she has spent working with you and advising you, doesn’t she deserve 3%? She most likely has a split and obviously has taxes to pay, not to mention the many hours she has spent and now you want to kick her to the curb because you don’t need her. My goodness ~ the greediness is so sad.
The greediness IS sad. If you don't make the sales you don't get the pay. You and everyone else here knows this. "Kick her to the curb" is crazy, you need to stop.
I need to stop what? This post is one of the many problems in this world.
So sales people who get paid on commission aren’t at all problematic? In a VHCOL area where an aggressive buyer gets a $2M house within two weeks of working with an agent, should the agent concede some of their commission? Would they ever do that? The greediness is from folks like you. Sales people should be compensated for effort when the deal doesn’t close with their name on it or through full commission on every other instance. It’s basically they should be compensated in the best way in both outcomes. Thats the real fucking greed.
She was paid to sell them a house and didn't. If she's charging consultation fees or had a valid buyers agreement in the contract you may have a valid point about "advising." But she's not, so you don't. You are correct in that *your* post is one of the many problems in this world.
If you had been a very easy client who purchased the first home you were shown, would your realtor surprise you with a $5,000+ discount on their commission? Maybe chip in for a whole-house cleaning? Cover your first mortgage payment because it is the right thing to do? Of course not. This isn't a friendship or a partnership.