Listing Agent Not Offering the Commission You Want?

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Your buyer finds the property that they want, and they’re not offering enough compensation. Either the amount that you want or the amount that your company wants, whatever it may be. Do you have to just accept what the listing agent offers? Or, if it’s a for sale by owner, do you have to take nothing? I mean, guys, there are for sale by owners out there who literally say, “I’m not paying any commission.” Really, you’re not paying any commission? Then how do you, as the agent, get paid?

Don’t get all crazy about it. Don’t get all scared. If you’re being shorted the commission amount, you can make up for it from the buyer. There’s several ways that you can do it. You can negotiate it into the sale. You can talk to the buyer about it. You can inflate their closing cost and make up that difference. Okay? That’s a method that we have here at our company that several of our agents utilize so that they don’t get shorted. I’m going to go over that example with you.

I just filmed a whole course on our fee differential system, so these numbers were fresh in my mind, and I wanted to go over them with you quickly. Let’s say your buyer makes an offer on a property for $400,000, but they need a closing cost credit of $4,000, according to their mortgage broker, to cover closing cost, but you get a little bit more to make up for that difference. Let’s say you get a closing cost credit of $6,000. See that right there? Net to the seller becomes $394,000. Follow me over here.

$4,000 goes to the buyer’s closing cost credit. $2,000 can go to the commission shortage. Yes, you can do this. No, there’s nothing illegal about it. My critics out there, you want to say it’s illegal? Go ahead and say it in the comments, because we can go on and on and we can talk about it. It is not. It is legal. It is ethical and something that we’ve been doing for several years. We’ve cleared it in all different kinds of ways and it works out really well. I’ll tell you something, buyers are really happy to pay.

When an agent provides good service and helps a buyer find a property, buyers are happy to pay it, and we see, probably, a handful of buyers a month pay it. Where did I come up with these two numbers? $400,000 purchase price. Let’s say you’re getting shorted a half a percent. Half a percent of $400,000 is $2,000, and that’s why you can build it into the closing cost. If you’re getting shorted 1%, you would change the closing cost to $8,000. Okay? You would be getting $4,000 towards closing costs and $4,000 towards the commission shortage, and it gets paid to you after closing right on the closing disclosure.

So don’t be fooled into thinking that you need to accept whatever a listing agent says or whatever a seller says because you don’t. Commissions are negotiable and they are between you and your buyer. Thanks, guys. Have a great day.