The Sales Price and Commissions

Cash

Maybe I’ve gotten carried away with photos of cash lately? Oh, well. The other day I got an offer on a client’s home where the buyer’s were asking the seller to pay their closing costs, and it got me thinking. Sellers, you might think about this. Hypothetically, let’s say you have your home on the market for $800,000 and the buyer makes an offer of $810,000 and asks for $10,000 to be credited back to them for closing costs. ( This type of scenario is not uncommon in this market right now).

30 days later (or more), when you go to closing, is the commission based upon $810,000 or $800,000? In most cases I’ll bet you’ll pay on $810,000. Why, you ask? Because plenty of time has passed in the escrow and the Title company bases the sellers closing papers on what they believe to be the purchase price per the contract…and they will calculate the total commission upon that. This is the type of thing that routinely falls through the cracks in the long paper chase that is an escrow.

Always ask your agent what price the commission is based on. You don’t need to pay a commission, to two different agents no less, on money you’re crediting the buyer. The commission should be paid on $800,000, not $810,000.

Comments

  1. Michael says:

    Is that next week’s Foto Contest prize there?

  2. Don’t you wish! Actually, I wish I had that kind of a wad too!

  3. Your advice seems logical, but the listing agent has to disclose in the MLS listing that the commission is based on the NET.

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