#1. The condo you want to buy is overpriced, yet you seem desperate to overpay. Maybe it is the best option for you, but that does not mean you have to make all the concessions.

#2. Perhaps your realtor is simply doing you a favor by not taking a commission. Is the realtor a close friend or relative? If so, I would make it up to them some way. If the realtor is a professional, and they still want to do this, I would pay...something...

My advice, worth exactly what you are paying, is to not be so anxious to close on an overpriced property. Let the seller reduce the price.

Good luck.

I already agreed to pay the seller's price.

No, the realtor is not a friend or relative.

It seems like the realtor is doing both you and the seller a big favor. You don't have to pay him is essentially what he said, but if you're willing to pay him something then he's more than happy to accept this. So you could choose to give him part of the commission he was owed, all or none. It is all within your choice to pay or not or how much.

I am confused. Are you buying the condo for the originally agreed upon price (paying the $20,000 out of pocket) or for the appraised price? What price range is the condo in?

I agreed to pay $133,000 but it was appraised at $112,000. I'm going to pay $112,000.

If I only pay part of the commission, I don't know how to decide how much of it to pay.

I don't know why my realtor agreed not to take a commission, or if the seller is taking their commission.

I guess I could have told my realtor that I would not to agree to the sale if he wasn’t getting his commission and that I wouldn’t pay it, but it’s too late for that now. I was told by another realtor that what normally might have happened is that the seller might have asked me to put in some additional money above the amount of the down payment. So maybe I might have paid $3000 to the seller instead of to my realtor.

Maybe it’s not a bad deal. The price of the condo was lowered a lot because of the appraisal. I feel bad at the thought of not giving my realtor anything for his time.

The impression I got from my realtor was that the seller would not make the deal if they had to pay his commission. I thought he said they were refusing to pay his commission. Maybe I misunderstood. I don’t think that is legal. My realtor said he just wanted to make sure the deal went through, the commission wasn’t important. I find it hard to believe that he wasn’t concerned about getting his commission.

I guess I am just confused about how this all went down and why you are stuck in the middle of it. IMO, if the seller didn't want to pay a commission (or tried to negotiate a reduced commission) due to the lower sales price, it would be up to the seller to negotiate that with their agent, and then for the seller's agent to relay the new terms and work out a fair split with your agent.

If your agent agreed to let the seller's agent keep the entire commission just to get the deal done, that is on him. He may have his own reasons for doing this (i.e., promise of referrals from the selling agent, a previous relationship with the selling agent, etc.). You should not have been put in the position of having to "feel bad" that your agent isn't getting paid - buyers don't pay commissions, sellers do, and all agents know this.

Wow. Sorry that your agent put you in this position. I might give them something but I don't think I would offer more than $1,000 since you shouldn't have been in this position anyway. I have heard of both agents agreeing to lower their commissions, but not this situation. I would want to know how much the other agent is getting before I made up my mind about what to do.

I know what it's like to have a hard time finding anything that meets your criteria and in a way, it sounds like you lucked out. You are saving $20,000 vs. what you had expected to pay and you are getting a place that you like. So in that sense, congrats!

Thanks for your opinion of offering $1000. That gives a figure to consider if I pay him anything.

I will question my realtor about this. I can ask why he involved me in his commission payment. I can ask why he told the seller I wouldn't pay his commission, but now he suggests that I do pay it. I can ask if he thinks the seller would have agreed to the sale if I had offered to pay a few thousand dollars more.

It is highly unusual for the buyer to get involved with any discussion of the commission for a property s/he is purchasing unless the buyer has signed a buyer agency agreement saying that the buyer will pay the commission. The seller signs a listing agreement prior to the property being put on the market. The listing commission is either a percentage of gross sales price or a flat fee. Most of the time it is a percentage of the sale. The listing brokerage lists the fee payable to the selling brokerage in the MLS. This is SOP. This is an entirely separate agreement between the listing brokerage and the seller that has nothing to do with the purchase agreement.

The fact that the property did not appraise has nothing to do with the commission. It is based on recent comparable sales as provided in the appraisal that is written by a third party (independent appraiser). The appraisal represents current market valued so negotiations open up again to renegotiate the sales price and other terms including the ability for the buyer to walk away with his deposit.

Mr./Mrs. Buyer, you should in no way feel bad about paying the appraised value instead of the contract price. There are some markets where the buyer will pay above the appraised value. It is totally up to the buyer what the condo is worth even if they choose to pay more than the appraisal or even to walk away or negotiate somewhere in the middle. This part is 100% the buyers decision.

I don't understand the selling agent giving up his commission at all - it has no effect on the seller's net proceeds as the entire commission then is paid to the listing brokerage. The exception would be if the listing broker agreed to reduce (or eliminate) his commission. In any event, it still has nothing to do with the buyer. You are under no obligation to pay your agent's broker (you can not legally pay the agent directly) anything outside of the P&S contract.

I assumed that the selling agent agreed to give up or reduce his commission due to the fact that the property didn't meet appraisal and is selling for $20K less than agreed. If the seller didn't have much equity in the property, they may not be making a profit and may not have cash on hand for the commission. If the selling agent agreed to forgo their commission just to get the deal done, my understanding is that the selling agent would still owe the buyer's agent's commission unless both agents agreed to forgo commission or worked out another arrangement privately.

Are any of you who commented real estate agents, or do you work in the real estate industry?

I'm just wondering what kind of expertise you posters have on real estate.

I work in the real estate industry and own a rental property but I am not a real estate agent, though I have been toying with the idea of getting a license for some time.

You owe your agent NOTHING. It is on your agent to receive his commission from the selling agent. That is how it is done. I wouldn't feel guilty at all. It's not your problem. And how do you know for sure your agent isn't getting his commission? Because he is telling you so?

I would ask for proof that my agent isn't getting his commission.

Denita is a real estate agent and my son is a real estate agent.

You do not have to or should you do anything. You agreed to a price and that is it. Anything else is between the two agents to work out. Period. Buy your agent a bottle of wine for his efforts if you feel you need to do something.

Denita is an experienced, realistic Realtor. Listen to her.

As a buyer, you aren't there to get involved with the ins and outs of other people's business issues. You offer. It's accepted, countered or rejected. Period.

I have to say- any buyer's agent who would come to you asking for commission is a poor one. Do you have a contract in process? Then proceed. Don't get emotional. It isn't "your side of the business" to worry about anybody's commission. Just to buy a property. If it's wrong for you, at this point? You have enough holes in this weird transaction to drive a truck through. Rescind, or stand tough.

I am a little unclear on how this deal is working out. If your realtor is agreeing to abandon all of their commission, and essentially step out of the deal, do not allow that. Put the brakes on this right now until it is worked out.

There are legal advantages to having a realtor in a transaction and I personally wouldn't allow the realtors to step completely out of the deal. You will have removed their legal standing and the protections that come along with that.

I don't see how they maintain their standing when they are giving up their side's commission. I am not saying it isn't possible, maybe Denita can answer that for you. If each realtor is just giving up their personal cut of their firm's commission then that is fine. If so I would suggest giving the realtor a little bit of money. Who gets what money will be spelled out in the Settlement Statement.

My realtor is still working the deal for me, despite no commission.

Former realtor and retired appraiser. Commission is traditionally the concern of the seller. Exceptions are very unusual. Sometimes an agent will reduce their commission in order to complete a deal, but to wave it entirely is not very common.

If you choose to do something for your agent, it is your decision. I would suggest a small gift such as bottle of wine or a gift certificate. If you give the agent a check, they will have to share it with their broker.

As a buyer, you should have zero involvement with commission negotiations unless you signed a buyer's representation agreement that requires a payment. We will assume this did not happen in this circumstance.

No, I have no agreement to pay my agent.

Yes, I'm an active full-time career Realtor. I have been in the real estate business since 1978 (development type both residential and commercial) and general real estate since 1997.

As homechef59 states, it is very rare for an agent to forgo their entire commission. Possible, but rare. His suggestion for a small gift is the right thing to do. If you do decide to pay a commission outside of contract, it must be paid to your agent's broker for the broker to disburse to the agent. In this type of instance the broker may or may not disburse the entire amount to the agent or the brokerage may disburse in accordance with their IC agreement on file. Either way, it is the brokers decision as all commissions belong to the brokerage and not to the agent. Disbursements follow a separate IC agreement signed by the agent and the broker of record. As pointed out, you don't have to concern yourself with the commission as you are the buyer.

As to the responsibilities of the agent: even if your Realtor doesn't get paid one penny, liability attaches to the Realtor for their role in your purchase. The commission has nothing to do with the responsibilities of both brokerages (listing and selling) to you. The listing agent and the selling agent have different duties to you and those duties can be found in the representation agreement you signed. If you did not sign one, then the brokerage has a disclosure as to their agency relationship they have with you. Ask your agent to provide it to you. Having said that, it sounds like your agent is doing the right thing by continuing to work with you even without any remuneration.

Thank you Laurie for your kind words.

No, I have no agreement to pay my agent.

Is your Realtor a Buyers Agent for you? If so I would read the Buyers Agent Contract carefully as our standard forms (Missouri) addresses how commission will be paid in the event that Seller does not pay....probably doesn't matter anyway since your Realtor agreed to do this for free...which is also odd.

I may have missed it somewhere but is there a Realtor representing the Seller?

I've had my Brokers license for almost 18 years and when properties do not appraise then the gloves come off on how to get the deal closed.

Another active Realtor here... residential and commercial for the last 15 years.

Why not just ask your agent why he/she gave up their commission?

I am assuming that at the new, agreed upon sales price, the sellers are not netting enough funds to pay the two agents' full commissions. But it is odd that he/she agreed to move forward for no commission at all.

While you are asking the agent why they gave up all of their commission, ask them if the seller's agent also did the same.

All of the commission disbursements will be listed on the closing form.

The best gift in a Realtor's eyes are referrals of family friends and coworkers.

No, my realtor does not represent the seller. I'm considering not bringing the issue up with my realtor. It stresses me to think about talking to him about it and then not giving him any money. On the other hand it might be good to understand why he continues to serve me without his commission.

So your Realtor is a Buyers Agent for you and a Buyers Agent Agreement was signed by you?

It is unusual for Realtors to work for free and most all things that happen in a real estate transaction happen for a reason....did you have an appraisal and finance contingency attached to the sales contract and did you object to the low appraisal in writing and prior to contingency expiration?

Why would the buyer object to an appraisal value that came in lower than the sales contract price? No reason to object at all. It opens up negotiations again to reduce the sales contract price to the appraised value which means the buyer is paying market value rather than a premium over market value.

BTW, not all buyers have buyer's agents. The buyer may have an agent but their relationship can be on a transaction basis as a transaction broker or buyer's agency or no representation. This is decided between the buyer and their agent. Not every buyer has a buyer's agency relationship with their agent. If they do, then the buyer would have to sign a buyer agency contract,

Denita...real estate practices vary in different regions and in my area and our State Approved Missouri Sales Contracts if the appraisal comes in low and the Buyer does not object in writing within the amount of days specified in the Sales Contract then the Buyer automatically waives the appraisal contingency and must purchase at contract price...surely you can see why a Buyer would object in writing right? Negotiations do not automatically open up in this area.

I do understand fiduciary responsibilities of Realtors (and real estate agents) and am trying to understand what ahorsefly's Realtor's duties are

My concern was the sale becoming FSBO, I have had the selling realtor try to remove themselves from the deal before. If the Realtors are extricating themselves from the transaction, is standing attached because of the prior representation?

My case was similar to this. The sellers were getting a divorce and the house wouldn't appraise. I was playing hardball with the negotiations and the selling agent offered to remove the listing and allow the sellers to FSBO and the seller would pay some of the buying agent's commission.

ETA: In the above situation the husband was abusive and the realtor wanted to push the deal through. I instead paid the increased price, and expedited the close.

bjjennings1954, you are right that they vary by region and I should have taken that regional difference into account. Here when the appraisal comes in under the sales contract price the agent for the buyer contacts the listing agent right away and negotiations are opened up to either cancel the purchase, reduce the sales contract price or pay over the appraised value or something in between. There is no mandate in our contract to do this in writing unless the contract price is changed and then that is handled with an addendum. Or the P&S agreement is cancelled, then that is also in writing.

I didn't notice in which state ahorsefly is purchasing their property. It's possible that the contract has other provisions.

I did sign an agreement with my agent. The seller's were not happy with the low appraisal. There was an appraisal contingency. I got the condo for the appraised price, but my realtor got no commission. I will be going to closing soon. I'm not sure if that answers your questions.

I have never understood the reluctancy of clients to be open and upfront when they have questions or concerns during a transaction. Openness between parties is usually the best way to prevent problems or hurt feelings from arising.

If your agent gave up all of their commission in order for the sale to happen for you, then you should know that. That is a big deal. If they gave it up for some other reason, you should know that, because that is even more odd than the first scenario.

Posters have been saying that a realtor's commission is their business and the buyer shouldn't be involved. Based on this, I suppose it shouldn't matter to me why my realtor gave up his commission or had it taken away. But actually I would like to know what happened.

Another realtor here for the last 28 years. It sounds to me like the appraisal price is low enough that the seller doesnt have enough to cover the costs of selling. Typically, in a situation where something happens and agents agree to reduce commission to get the deal done, its split equally between both agents. You as the buyer dont have to be involved in any of it, you can just go on your merry way and close on your condo. But, your agent has agreed to work for you for free to get this job done. Sometimes, we cut our losses so our buyers can get their home. Its not that unusual. (it is unusual to not get paid at all, but I have no doubt this happens more often then we hear about) If it was the only way to get the deal done, then it was the only way to get the deal done. She/he asked if you would be willing to pay her commission because the seller obviously renegotiated with his agent and the funds arent there. If you are not willing to do that, your agent has agreed to finish out the transaction anyway. There is nothing suspicious about it, she cares about her client getting the house more than the approximate $1500 shes going to get on this transaction. As a buyer, and a compassionate human being, I WOULD ask your agent what happened, because I WOULD want to know. If I couldnt or wouldnt pay my agent their commission, I would at the very least give them a few referrals to make up for the loss on this sale. She is helping you, help her too.

Mostly everyone who has posted here has told me not to pay him, that it’s not my problem. I asked him about it when he first told me about not getting his commission. I didn’t really understand his explanation. It kind of seemed like he didn’t want to go into detail about it.

It makes me uncomfortable when I think about asking him about it again and then not offer to pay him anything. Maybe I should ask anyway.

I found out that my realtor will get about half of his commission. There is a program with the bank in which they take a percentage of my realtor’s Commission and use it to reduce my closing costs. They are taking $300 from his commission and applying to my costs. Should I take it or let him keep it?

Do what you see as best. Personally, I'd be concerned as to why you have a seller's agent, your agent and the bank all trying so desperately to close this transaction, in concert.

"I found out that my realtor will get about half of his commission. There
is a program with the bank in which they take a percentage of my
realtor’s Commission and use it to reduce my closing costs. They are
taking $300 from his commission and applying to my costs. Should I take
it or let him keep it?"

Again, I'm not sure why any of this is your problem or why you have been made privy to the information, other than because you asked and he told you. This "bank program" also sounds completely made up to me - perhaps the realtors on this thread can weigh in, but I have never heard of such a thing. When we bought our house recently, my bank and my realtor had absolutely nothing to do with each other. How are you verifying all of this, other than taking his word?

Something does not sound right... if the bank is taking half of the agents commission, which is $300, then the total commission to begin with was only $600? That is not right if the sales price is $112,000.

The lender only has a say in the commissions if the property is being short sold. And if it is, you would need to have been made aware of that, as all new contracts and addendums would have had to been drafted and signed.

I may not have explained things clearly enough. I'm not using a seller's agent. The information about my realtor's commission is on the ALTA form. The program to use some of my realtor's commission to pay my closing costs is legitimate program at the bank. $300 is not half of my realtor's commission. His commission is several times more than that.

Anyway I think I'll let the $300 be applied to my closing costs. He did get some commission. Thanks to everyone for their advice. This is a very valuable forum.

'My realtor said he just wanted to make sure the deal went through, the
commission wasn’t important. I find it hard to believe that he wasn’t
concerned about getting his commission.

Hello ahorsefly.

I hope I am not putting a fly in the ointment but it seems to me that maybe the realter is very keen on this sale going through as he or she possibly has a monthly quota of sales he/she needs to meet.

I understand your wanting to understand the why of something. I'm like that too. And when people try to cover our eyes we get suspicious.

I have heard of the program the OP is referencing. It is a referral program where the buyer comes to the bank or CU for a mortgage and the bank or CU refers the buyer to an agent. The lender takes a 25% to 35% referral fee for referring the buyer to the agent. A portion of that referral fee is rebated to the buyer/borrower at closing. It is a legitimate program. I have never participated in one of these, but I have seen other agents participate.

tete_a_tete, it would be very unusual for a Realtor to have a monthly quota unless it was self-imposed. Realtors work as independent contractors. There may be other business models where they are employees but that is extremely rare.

"It is a referral program where the buyer comes to the bank or CU for a
mortgage and the bank or CU refers the buyer to an agent. The lender
takes a 25% to 35% referral fee for referring the buyer to the agent. A
portion of that referral fee is rebated to the buyer/borrower at
closing. It is a legitimate program."

Aha! That makes perfect sense - but in that case I see absolutely ZERO reason for the buyer to "give back" this rebate. I realize that the OP didn't indicate that his agent asked him to do so, but in any case - don't!

Thanking my lucky stars this isnt my deal! WHEW!