COMMISSIONS: Q: Dear Broker, We are in negotiations and close to a contract on a commercial transaction with a non-MLS member. He emailed me that he confirms the commission is 3% to the Buyer Broker (HomeSmart). I don't have a signature, just an email confirmation. Is this sufficient as a "separate agreement between brokers" for payment of co-broke? Do I need it signed by theirs and our broker, too? Thx, Steffy
A: Hi Steffy, an email is better than nothing, but if it were me I would want something signed by the agent just because that's a bit more official. Take Care, Kyle
COMMISSIONS PAYABLE TO HOMESMART: HomeSmart is to receive your fees prior to you receiving your check. If the check is cut directly to you, please cut HomeSmart a check to cover your fees for the transaction.
COMMISSION ADVANCE: We have a request that came in from an agent. Apparently builders are beginning to offer commission advancements to agent/brokers. I have attached the advancement addendum for your review. This one is from Meritage and I was told Toll Brothers are offering the same. I want it noted that if the transaction fails to close the advanced commissions will be due to the builder within 30 days.
I guess other brokerages are allowing this, what is our policy? JS
“We do not allow agents to get commission or until it closes unless builder will put in writing that it does not have to repaid if it does not close. They can pay us and we hold the commission until closing.” TM
COMMISSION ADVANCE: HOMESMART ONLY PAYS ECOMMISSION ON SALES, NOT LISTINGS.
COMMISSIONS: DEFEND YOUR COMMISSIONS WITH YOUR SELLERS!
Q: Can I offer a rebate to my client?
A: Hi XX. Anytime we see a phrase like buyer rebate, we need to see three things: (Actually, the first thing is to change the word "rebate" to the word "credit". We can "credit" our clients in a transaction, we do not send or give them a "rebate.") The three things we look for are:
1) value of the credit 2) what they have to do to qualify for the credit, and 3) the date(s) the program begins and ends to get the credit. You have the first (value = $1500). Please resubmit to the broker dept when ready. Jeff.
COMMISSION REDUCTION REQUIREMENTS FOR BUYER/SELLER CREDIT PROGRAMS
1) Subject to lenders approval
2) CREDIT not REBATE
3) Dates of program
4) Approx value
5) How Qualify (what performance is required)
6) Waive commission, take $ off sales price, tax free
7) Waive commission, have seller give same dollar amount in concessions instead, tax free (Better, less out of pocket cash required at closing + tax free + not taxed on this income + better than off sales price, amortization schedule = short vs long!)
CRI: Credit Reduction Instructions: CREDIT SELLER OR BUYER AT COE:
I want to credit a portion of my commission to the Buyer’s down payment or closing costs. How do I do that?
There is a form under downloads titled “Commission Reduction Instructions.” Complete that form and forward it to the title company. Brokers will send a copy to the closing department after they sign. Keep in mind, it will be subject to the lender’s approval. Be certain you obtain the lenders approval prior to offering this to your Buyer as there are some loan programs that do not allow contributions to the Buyer, or that have a cap of contributions that the Buyer can receive. You don’t want to be in a situation where you’ve promised to contribute money to your clients costs only to be told by the lender that you won’t be allowed to.
COMMISSIONS, COMMISSION REDUCTION INSTRUCTIONS: I am selling and purchasing a new home for myself. I would like to waive my co-broke on the purchase. Would it be appropriate to include the language in the contract or should it be done separately? Also, are there any savings in the fees owed to Home Smart since it is my own sale and purchase?
Hi Chad. It is never appropriate to include any language in the purchase contract referencing commissions. That should be done outside of the purchase contract. I have attached a form that you might be able to use to address waiving your commission in lieu of a lower sales price. Please call with any questions regarding this.
We do not offer discounted fee's for owner/agent transactions.
COMMISSION, WAIVE COMMISSION: (see form)
I have attached a commission waiver form. Remember, you must have at a minimum your HomeSmart transaction fee's.
It is against policy to include and verbiage in the contract regarding commissions, so use a form such as the one attached to accomplish that.
Also remember it is up to you to ensure that your contract price reflects your commission adjustment.
CRI Hi Patti, I can't sign this one either. You cannot pay or allocate commission dollars to anyone other than your client or another licensed agent. In this case you're saying to pay AZ Fence Company, which we can't allow.
What you'll want to do is simply credit the $1000 toward your clients closing costs, and that will leave the $1000 in their pocket to pay the fence company. Sorry that it needs to be revised again, but unfortunately we can't do it this way.
COMMISSION, BUYER WAIVING COMMISSION: I am personally buying this home and will pay for the $300 transaction fee at closing. Thanks for approving, and please call with any questions.
Here you go Debbie, please make sure that you instruct the Escrow Officer to put the $300 as commission on the Settlement Statement as a Buyer cost. I made that change on the form. That way it's going thru the title company. Kyle.
COE ADJUSTMENT: “COE may occur sooner with a written, mutual agreement between the parties.” Do not write COE as "on or before xx/xx/xxxx." Too ambiguous.
“Seller and Buyer acknowledge and agree that COE may occur sooner with written, mutual agreement between the parties.”
COE Delayed: I have a land sale that should have closed Friday Sept 8th, but did not close. The title company sent the closing papers to the buyer on Sept 7th and he lives out of state. He is a truck driver and could not get the papers signed and sent back to close on Friday. They are hoping to get the paperwork back to close Monday Sept. 11th (today). I wasn't notified until Friday afternoon when I asked how closing was coming along. My question is, do I need to do anything? Do I need an addendum sent over with a new COE date?
“No you really don't need to do an extension at this point. If you know it's going to close today then I'd basically just wait and let it close. If it were going to be next week then I would say to do an extension, but for a few days it's not overly critical as long as the parties are all on the same page.”
COMPENSATION FROM BOTH BUYER AND SELLER LANGUAGE
“All parties acknowledge that buyers agent is being compensated by both seller and buyer in this transaction.”
Q: I have a question in regards to one of the review items…Receiving compensation from both Buyer and Seller. I am not. YES YOU ARE!
A: It does appear that you will receive compensation from both buyer and seller. The MLS co-broke offering is 2.5%. Your buyer broker agreement is for 3%. That means the buyer will make up the half point difference (see line #29 of Buyer Broker Agreement). Let us know if this is not the case.
COMPENSATION ADJUSTMENT: “Contrary to any offer of compensation offered through the Arizona Regional Multiple Listing Service (ARMLS), the total compensation due to the Selling Broker upon successful close of escrow for the above transaction shall be X% or X$.”
COMPENSATION: “OTHER COMPENSATON”
Q: I plan to create and sell online video tutorial courses directly to U.S. home buyers and sellers. Is this something I can do while with HomesSmart?
A: I emailed Trudy and she responded that this would be acceptable and that "the money doesn't need to flow through HomeSmart." Obviously this would be a separate business venture from your HomeSmart real estate business and there would be no connection or mention of HomeSmart, this would be completely separate. Give me a call with any questions. Jeff.
CONCESSIONS: CLOSING COSTS, SELLER TO BUYER CREDIT LANGUAGE + overrides language in contract that limits WHAT items can be credited). “Seller agrees to credit buyer $x at COE which may be applied to any and all borrower closing costs including loan costs, title fees, escrow fees, pre-paids, appraisal, HOA fees, capital improvement fees, home warranty or any other closing cost approved by lender at buyers sole discretion.” However should the total buyer closing costs be less than the agreed amount of $4,500 both parties agree to a principle price reduction by the amount of the remaining balance.”
2) “Seller agrees to contribute a total of $x towards buyer closing costs which include but are not limited to pre-paids, appraisal fees, loan costs, title and escrow fees, home warranty and any other closing cost approved by lender at buyers sole discretion. Any unused portion or amount disallowed by lender shall remain with the seller.”
“Seller to credit buyer an additional $X at close of escrow, bringing total seller concessions to $Y.”
CONCESSIONS, REMOVE CONCESSIONS DUE TO LOW APPRAISEL (or any reason). “Seller & Buyer acknowledge and agree that contrary to line #x of the PC, seller concessions shall be a total of $0 (or, shall read $0).” OR
“New Sales Price shall be Appraised Value of $x.” “New Sales Price is $x” or “Sales Price is hereby Reduced to $x.” “Seller concessions are hereby reduced to $x (or x% of new or existing sales price).”
CONCESSIONS, BACKGROUND--Pre Qual or LSU says buyer relying on concessions but concessions removed, REVISE LSU
CONCESSIONS REMOVED, COUNTER OFFER LANGUAGE: "Buyer to provide an updated pre qual or LSU within 48 hours of contract acceptance with seller concessions removed as a requirement."
CONCESSIONS: Prequalification says no but buyer is asking for concessions in purchase contract. They don’t need the concessions. Probably submit a counter offer removing concessions.
CONCESSIONS: RAISE PRICE SO CAN ASK SELLER FOR CONCESSIONS? Q: I am representing the buyer and we are within the 10-day home inspection period. We offered full price and didn't ask for closing costs as my buyer thought she would roll her closing costs into her loan. She now doesn't want to do that because her interest rate will go from 4% to 4.5 or 4.625.
The home was priced on the low end of the comps so I asked the listing agent if we could raise the price 5k and sellers give 5k for CC's. The listing agent is worried about that flagging the appraiser. My questions are. If seller is willing to do this could we just give them a new pg one with the new price and a new pg 3 with the 5k CC's or would we have to cancel this contract and write a new one?
A: You cannot just replace pages within a contract - the buyer and seller can formally cancel the contract and escrow and re enter into a new agreement. Jenny
con·cil·i·a·to·ry, kənˈsilēəˌtôrē/Submit adjective intended or likely to placate or pacify. "a conciliatory approach"...
When selling a home where the buyer is represented by another HomeSmart Agent, is the Buyer or Seller Agent responsible for initiating the Dual Agency Agreement?
A: The buyers agent should prepare the consent to limited representation form at the same time they write the offer. They will present that to the listing agent along with the purchase contract. The listing agent should present that first to the sellers, explaining that HomeSmart will be representing both sides in the transaction.
CONTINGENCY, ADD CONTINGENCY: This contract is contingent upon Sellers Receipt and Approval of acceptable engineering report on Replacemen Property Seller is purchasing out of state. If this contingency is not removed by xx/xx/xxxx, this contract shall be immediately cancelled and all Earnest Money shall be immediately returned to the Buyer. Inspection period shall begin when Seller gives notice that this contingency has been Satisified/Removed.”
CONTINGENCY CLAUSE: A contingency clause defines a condition or action that must be met for a real estate contract to become binding. A contingency becomes part of a binding sales contract when both parties (i.e., the seller and the buyer) agree to the terms and sign the contract.
CONDITION: SEE “PREMISES IN SUBSTANTIALLY THE SAME CONDITION”
co·nun·drum: a confusing and difficult problem or question. synonyms: problem, difficult question, difficulty, quandary, dilemma
CONVEY AT CLOSING: This contract is contingent upon the successful conveyance of the unrecorded easement (or whatever, see attached) which is to occur simultaneously along with the closing of the property located at 123 Main Street.
CORRECTION ON CONTRACT, WRONG BOX CHECKED: “Line #xxx of the Purchase Contract was erroneously checked/marked, and is hereby considered unchecked/unmarked.”
CORRECTION: “Counter Offer #1 to reflect unit #5.” (Or whatever correction is, on offer, counter, addendum, etc).
CRITICAL DATE LIST: I was wondering if there is a quick reference check list or timeline guide for deadlines available as supplement the full rules and regulation guide to help make it easier to meet deadlines (status change requirements, lock box removal, etc.).
The Critical Date List on zipForms is a nice tool to help manage deadlines and due dates in a transaction. Many agents are using it.
CRITICAL DATE LIST: SEE “NEW AGENT”