Reader Question: A home buyer offered us an amount that we liked. But there was an addendum by the buyer’s agent for extra commission. We did not accept that and counter-offered. However, our agent told us the deal would not go through if we did not accept the request by the buyer’s agent. Can a buyer-agent present an offer to a seller based on the seller paying extra commission?
Monty’s Answer: The listing real estate agent must present all offers to a seller. Based on the scant information provided, there is a good chance the buyer is asking you to pay an additional commission and not the agent. Your broker splits the commission with the selling agent’s company, and the split may not cover the amount the buyer has agreed to pay under the buyer agency agreement.
The dirty little secret in a buyer agency agreement
We will assume there is a buyer agency agreement in place. When there is no written buyer agency agreement, the agent remains a sub-agent of the seller. Without an agreement, the buyer-agent has no claim. The main talking point for a buyer agency is, ” The seller pays your buyer agent fee instead of a co-broke fee.” If the co-broke fee the buyer-agent collects from the listing real estate company does not cover the buyer-agent cost, the agreement states the buyer will make up the shortfall. Some agents are uncomfortable explaining that clause to a potential client for fear the prospect will walk away.
Typically, but not always, there is enough commission to cover the buyer-agent fee. What happens if the buyer finds a home that is a for-sale-by-owner (FSBO) and the seller refuses to pay? The buyer may have to pay the full agreed-upon amount to buy that home. You can learn more about buyer agency at https://build.dearmonty.com//read-contract/
Your choices
Pay the extra one-half percent or reject the offer and try to negotiate. Who signed the addendum you mentioned? The agent cannot interject an addendum into a contract between a buyer and a seller. It is the buyer asking for extra commission for the agent, so they can avoid the payment.
If the agent created an addendum and the buyer did not sign it, is the buyer even aware the buyer agent has done this? In my state, this could be a cause for disciplinary action against the agent and the agent’s broker. The agent’s broker is responsible for the agent’s actions.
Will the house sell again tomorrow? How long has it been for sale? If your home is a hot ticket, as a seller, you may decide to test the buyer’s resolve.
This opinion could change as new information surfaces. If all four of the agents participating in the commission step in, the problem may disappear. Do not make any decisions based on these comments, but go to your broker instead.