Is there anything preventing adding a few percent extra onto an offer to cover our agents commission as buyers? Seller is not offering to pay buyers commission, but I thought maybe if we add it into the purchase price with an agreement that they pay our agent, it won’t actually cost them anything and save us a bunch of cash up front.
Gross up price to pay buyer agent commission?
byu/mild_convective_strm inRealEstate
Posted by mild_convective_strm
10 Comments
Yes, this is a common strategy. The only “catch” is that the home will need to appraise at the higher price.
No very common. You’re just financing your closing costs essentially.
Your house has a market value. Your buyer pool will have expenses that weigh into their value proposition. Buyer financed closing costs may be a consideration. Learn your market and who your buyer will be. You will receive the net of that market value less your best buyer’s expenses. You can manipulate the market value through excellent exposure.
The realtors love it as they get paid a percentage of the selling price so they usually make a few extra bucks.
Your agent should be advising you on this, if they aren’t, they aren’t earning the money you’re trying to pay them!
There are several ways to work a buyer agent fee into the sale price. Any offer you make should be based on comparable sales data, there are several factors that go into determining an offer price. Again, your agent should be doing this for you and walking you through the data and reasoning behind an offer price.
If you’re getting a mortgage, that sales data is going to be important because it’ll inform the appraisal. Again, agent should be explaining how this works, and if/how you could use an appraisal contingency to possibly mitigate your risk.
The biggest agent fail that I see here is neglecting to collect intel from the seller side. Why are they refusing a buyer agent fee? Is it because they priced it not to include it? Do they just ‘hate’ buyer agent fee? Or some other emotional reason? (it’s usually emotional)
If they priced the home using comparable sales that paid 2 agents, then their price is off when they refuse to include the agent fees in the purchase price.
With that intel, you may be able to present an offer that doesn’t require grossing up the purchase price. Call it something else in the offer, present it in a way that satisfies the seller’s emotional needs.
Yes, this is done all the time. That being said, the only restriction is going to be that you cannot put the commission into your financing, but that’s unlikely to be an issue.
Put it in the offer.
Any seller would be an idiot not to accept this. It’s normal procedure.
Seller is just being a bit ignorant since any buyer that has commission to deal with is going to have to take it into account when making an offer on this house vs a similar house who pays the commission. Just make it clear to them you are including extra to cover the commission. Just don’t be surprised if they refuse. Sellers who are underwater on their home are often delusional on their situation.
We buffered in $7k to help with the agent costs. House appraised much higher so no hiccups.