Allen Brothers Houston Real Estate

Sales Commission...who pays, the Seller or the Buyer?

May 2nd, 2019 2:24 PM by AllenBrothers Realtors

Typically if to be published in the MLS, the Seller agrees to pay the sales commission negotiated in an exclusive right to sell agreement with the Seller's Broker. In that same agreement, the Seller also agrees the commission payable to the Buyer's Broker. The Buyer's Broker would not receive any more commission from the Seller. So, the Seller pays the sales commission to both the Seller's and the Buyer's Broker Seller negotiated with his Broker prior to posting in the MLS. The commission amount is deductible on the Seller's tax returns, not only at the federal level but in many states as well.

The one exception is when the Buyer's Broker negotiates a commission with a Buyer in an exclusive representation agreement more commission than the Seller has agreed with Seller's Broker to pay. The Buyer's Broker charges the Buyer the shortfall if above the Seller's agreement. For the Buyer of the property, the commission amount (along with other closing costs) are added to the basis of the property, to reduce the gain when the property is eventually sold.

The proper handling of offers is critical to the successful closing of a transaction. Commissions are often thought to be negotiable at the time of the offer to purchase, which is not the case This question will explain why:
When an agent writes up a purchase agreement, can he/she put a higher commission in the contract than is stated in the MLS?
No. The cooperating broker, when acting as a sub-agent or a 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. The offer, however, must still be presented to the seller

Posted by AllenBrothers Realtors on May 2nd, 2019 2:24 PM


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