the original listing for the home we are purchasing stated that the buyers agent would recieve a $1k bonus with an acceptable offer. THis was fine when we went under contract the first time for the full asking price however, that contract fell through due to our financing. After we found a new LO we were able to make another offer but it was $100k less. The sellers accepted but took the $1k bonus off of the table. Our realtor immediately had us sign an agreement stating that we would pay the bonus. In hindsight, I really think we should have not agreed to that. Now that we are so close to closing, we realize just how much cash we have to bring to the table and we are paying an arm and a leg to break our lease. We did ask our realtor if we could split up the payment $500 at closing and $500 within 30 days but he said his broker would not agree to that. SO we will pay but I was wondering what you guys think about our realtor even expecting us to.
Agree with toolman, think it was a sneaky thing to do, you were excited and he played your emotions at that time. I've been following your story, and happy to see you so close to getting this home, good luck!
yeah...not too pleased about it and this person is a family friend.
Oh yikes! Man, i'm sorry, that is a bad situation that will stick around.
Agreed. I thought it was pretty crappy to start with, but the fact that it is a family friend makes it much worse.
Generally the seller pays the buyers agent with a commission from the sale of the house.
Possibly he is still collecting that commission. Just not receiving a bonus on top of commission.
Now it is possible that will be their total payment to him or her and charging you for their services. If you feel they did not perform any services such as help you with comparables to negotiate selling price, then you should have them justify the compensation.
Real Estate is not an easy business, the agents spend lots of time marketing, searching, negotiating, etc etc.. The time put into each client is very time consuming. Most of their time and efforts you do not see. Now like anything else you have the good (who do their jobs) and the bad (who act like their doing their job).
Personally I would have denied a bonus also. If you felt they deserved something I am sure you would have worked something out since you were friends. Seems your friendship in this case was money motivated.
While saying they wouldnt be a friend no longer in my opinion is a little harsh, but I can say I wouldnt refer them or do business with them again.
Glad you found the home you wanted and things are working out now for you. Good Luck in your new home...
The bonus is definitely in addition to my realtor's commission. I worked as a licensed PA Realtor for a few years and I know how much work is entailed. I am not at all saying that my realtor doesn't deserve the bonus but I don't agree that we should be paying it. If anybody is aware of our financial situation it is him. He rode this crazy wave right along with us but as soon as the sellers responded to our second offer he told us that we would need to pay the bonus because they took it off the table. At the time we were so surprised that they accepted that we didn't really think it through but after a while we were like "wait WHAT?" lol oh well
Actually the commission is agreed to via a listing contract between the listing agent/office and the seller. The seller only pays the listing office. It is split on the HUD between the offices, but the contract is between the listing office and the seller only.
The agent/office for the buyer gets paid an amount that the listing office specifically states in the MLS as a portion of the listing commission specified in the listing contract. In effect, it is a conditional contract between the listing office and the selling office for X% if and only if the contract closes with that selling office.
( Note here: commissions are paid to the selling office by the listing office and then the selling office takes their cut before the buyers' agent ever gets a penny.)
Commissions to buyers' agents vary all over the place. Some buyers agents have the buyer sign a contract for a specific percentage of the purchase price and if the listing office pays less than that percentage, then the buyer pays the difference. If a buyer does sign one of these buyer contracts, then they are on the hook for the designated time period even if the agent they signed with never does a thing. So be careful with these type of contracts (called Buyer Agency contracts).
Having said the above, the fact that your agent came to you after the fact and had you sign a contract for the bonus is a pretty low thing to do. As a buyer, you should know all of your expenses , up front, including any contingent commission due. By upfront, I mean before you head out the door to look at property.
To come in after the fact and ask for the $1,000 bonus is not the ethical thing to do IMO. Most of us in the business know that bonus commissions are rarely paid by the seller. Especially if the listing reads: "at full price a bonus of X to the selling office" or something to that effect. That is nothing but a marketing trick. Who would pay full price unless the property is listed less than market value? That is why I believe your agent took advantage of you by having you sign for that bonus knowing he would never get it under the new contract terms.
I am the last person to devalue what an agent does, because as JM-AM mentioned, there are many, many hours devoted to the deal that the buyer and the seller never see in order for the deal to close smoothly. If your process was "effortless" than your agent put in a ton of work behind the scenes. I'm a Realtor and it's my career, not a hobby. But there are ethics involved here. Unfortunately, you have a contract with your Realtor for the $1000 bonus. Use it as a valuable lesson for the future.