Expert: liznarr - 11/12/2008

Question
A few months ago, before listing my house, I found a new property.  I approached a local realtor and allowed him to get in on my deal there.  He accompanied me to the sale and advised me on the contract.  For this, he will receive a commission on that sale of about $7,000 from that seller.  We then listed my house with a standard contract giving him 6% to split as required.  We got an immediate contract that was $18,000 below my ask.  I countered by reducing $5,000.  There was no counter.  Now, 2 weeks later, that person is back and thinking about another offer.  Although low, I have a set price in mind that will satisfy me - but he must come up $6,000 from his earlier offer.  That will still be $12,000 below the ask, plus we priced it lower than the norm to try to sell quickly.  I'm afraid if he doesn't come to my price, and I counter again, he will disappear again - and may not return.  Although he will be the winner no matter what, I could get my theoretical price if the realtor lowered his commission to 4 or 5%, depending.  The potential buyer isn't represented by an agent, so my agency would get the full commission.  The full commission would be between $8 and $10,000.  Question:  although the contract is for a straight 6%, is there legal/ethical wiggle room to accept less to make the deal work for me?

Answer
Hi Bud,

Yes, there is both a legal and ethical way for your listing company to accept a lower commission to make the deal work, especially if the potential buyer is not represented by an agent.

Real estate commissions are, by law, negotiable.  If your agent does not have the authority to lower commission on any deal he is working on, the Broker-in-Charge may have to give the approval.  Be sure and get this in writing from the BIC if you reach an agreement, as the BIC is the person who has the final authority to reduce a commission.

My best advice to you is to simply tell your listing agent what your bottom line will be for this buyer, and the associated commission that you would be willing to pay if the deal is worked out.  I would point out to him that a higher portion of commission (4% or 5% as opposed to his receiving only 3% on a co-broke sale – and also NOT having to deal with another agent as in a co-broke situation), is not a bad deal at all.  You may need to play hard ball, but go for it.  

In these difficult times today, a ready, willing, able, qualified buyer can be hard to find.  Since you brought this agent to the house you will purchase, and he was not involved in the time-consuming task of riding you around to show you homes but will still collect a nice commission; I would hope that since you also listed your house with him, both he and his BIC will be willing to give you a break.

Good luck to you, and I hope you reach a successful conclusion.  Feel free to write again if you have additional questions.

Regards,
Elizabeth