@StartingOver10 wrote:
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.
thanks! I know how the commission is commonly disbersed and I agree that this is more of an ethical issue. Our first offer was full price so ofcourse the bonus was included. But now the sellers are taking $20k less so they took the bonus off of the table. As a buyers agent in that situation I just would not have even thought of asking my clients to pay me. I would have taken my 3% of the lesser sale price and moved on. The reality is that when the deal fell through the first time, while we were devastated, we did not know that it would not have worked at that price anyway. We offered the full price of $185k but the house only appraised for $180k. We are purchasing for $178k so in essence that bonus was never really going to happen. We know we are contracted to pay it and we will but I was just wondering what other people in my position thought about it.
