Realtor commission based on MLS list price or purchase price?

Question

Putting an offer on our first rental property and my buyer's agent has put in the contract that her commission will be... "3% of the purchase price or the MLS listing price, whichever is greater." Is that typical?

The listing notes that the seller will pay the buyer's agent the standard 3% commission, but I'm assuming that is based on the purchase price. If that is, in fact, the case, I would be responsible for paying the difference in the commission rate, since the sales price would be lower than the list price.

Am I interpreting this correctly?

Thanks!

Jon Holdman · Answer

No, not typical.   Commissions are based on actual purchase price.

Yes, if you agree to this you'll have to pony up the difference.  I would not agree to this.

Ryan Dossey · Answer

Yeah.... I would probably look for a different agent.. As a buyer's agent they should be out to help you not give you grief.

Gary Fischer · Answer

I'm not sure that would even be legal. You'd have to check in the state the property is in but just an example from discussing submitting an offer in California. They would be modifying the listing broker's commission structure.

When an agent writes up a purchase agreement, can he/she put a higher commission in the contract than is stated on the MLS?

No. The cooperating broker, when acting as a sub-agent or buyer’s agent, shall not use the terms of an offer to purchase to attempt to modify the listing broker’s offer of compensation stated in the MLS Rules nor make the offer contingent on the modification of compensation.

I understand they aren't changing the percentage but the structure in the MLS is based on sales price. So, the effect would be to modify the compensation.

Josh Bakhshi · Answer

Jenny,  You shouldn't pay your agent anything unless you agreed PRIOR to making the offer or when you hired her as your agent.  They would usually get 3% of the actual purchase price or sometimes there is a minimum.  Either way, it shouldn't effect you.

Good luck

Azeez K. · Answer

@Jenny T.

Agree with @Jon Holdman . Don't do it or you will pay the difference...this sounds very sketchy.

Hope all is well.

Eric Trostle · Answer

Buyer's have enough expenses buying a home that I don't ever charge clients money and get paid whatever the BAC is.  I'd recommend having a chat with your agent to see if he/she is gonna hold you accountable to the 3% regardless.  For example if I put 3% on my buyer agreement but the compensation being offered from the seller is only 2.5% I just have my client sign an addendum reducing the commission agreement amount and then my accountant can use that on my taxes as a discounted service.

Steve Morris · Answer

"3% of the purchase price or the MLS listing price, whichever is greater." Is that typical?"

Can only say my listing agreements are based on CLOSING SALES price.

I thought comm RE guys were bad, but some of the resi guys in Portland are asking 6% for $500K+ properties.

Theresa Harris · Answer

@Dawn Cohen  When showing potential clients listings, why not show them what those other realtors listed homes for and what they sold them for?  Tell them there are a few realtors that overprice the home just to get the listing and it rarely works...then show them the numbers.  I'm sure it is a couple of realtors who are doing that.

Dawn Cohen · Answer

I lost three listings to overpriced fake agents comps.  The seller asked me what the home will SELL for and like an idiot i told him the truth.  From now on,  I will take my commission on the LISTING PRICE to teach overpriced sellers that the way to go is to list it for what it will sell for and maybe get MORE>  The beauty of listing and paying on the LIST PRICE.  is that if a seller gets MORE THEN LIST PRICE, guess what..... they only have to pay the % on the original list price and not the extra.  Any takers?  are you brave enough to list your home correctly for once in your life?  Most of my over priced competitors homes sold for LESS then I originally told the seller they could get.   I get you more and you pay less.

Realtor commission based on MLS list price or purchase price?

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