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Buying and Selling Homes

Paying buyer's closing costs, commission to my Realtor ?

15 years ago

I am selling an investment home in the Denver area for full asking price ($135,000) minus $4,000 toward closing costs I am picking up for the buyer. Is my REA's commission based on the full selling price ($135,000) or the selling price minus the closing costs ($131,000)?

Comments (9)

dave_donhoff
15 years ago
Hi Babs,
Refer to your listing contract... the rascals are in dem small print details. That's the only true answer anyone here could give you.

Congrats on getting a solid buyer!
Dave Donhoff
Leverage Planner
babs77
Original Author
15 years ago
Thanks Dave. I had already looked at my contract but didn't see anything that addressed this specifically but I could be overlooking it.

We're very excited to have sold in only 3 months with the current market. Already looking at buying our next fix/flip!

Many helpful folks on this forumn! Thanks again.

Barbara
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Mary, are you sure about that and how are they deductible? For example if I am selling a house for 700k and buying a house for 800k I do not have to worry about paying tax on the gain. Is this the situation or some other situation where it is actually deductible as some type of personal expense? Is the realtor commission deductible or only as part of the sale if I am not buying a more expensive house (or my profit is more than 500k for a married couple) Also what expenses, mortgage recording tax, which is payable to my local county or town, is this deductible? For whom and why, this is normally paid by buyer Title insurance (whether for bank or homeowners?) Prepaying any property tax would be New survery, normally paid by buyer, deductible if done by seller or only if not buying a more expensive house? Bank fees, bank attorney fees, points? Deductible? By whom and why Would love to know the answers without calling an accountant For more expensive houses, not starter homes, in the NE, anyone heard of seller paying closing costs? Also in NY there is a mansion tax for sales over 1 million (usually nothing near a mansion, more like a 4 bedroom colonial from 1960 with the original kitchen) so you never want to up the purchase price when you get near that number
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EXACTLY!!!! That's why I suggested you start focusing on what you want to do with your retirement years and the rest should fall more easily into place. If you think you'd like to get a fifth wheel and see the country, then your needs might be considerably different than if you think you'd always like to have a herd of llamas. I live a rural life in a rural area and I second what the last poster said. I run an agri-business on my land, but have excellent access to a decent hospital. One of the reasons is that our county is a place where the medical needs of six Appalachian counties are met. So we have some first-class specialty units where you'd least expect them. I do have to drive nearly two hours for 'big-city' culture or shopping in mega-malls, but I'm fine with that. I prefer to buy locally produced foods (or grow and butcher my own) and I am practically a plain living person who has very few consumer needs. However, the land we own takes an enormous amount of upkeep and I don't know how well that's going to get accomplished as my husband and I age. We also live in a nearly two hundred year old home, and what others have said about historical properties is true. We've been working on this for over a quarter of a century and the work (an expense) is never done. Perhaps you are not ready for your 'old-age retirement' home yet. I'm not. LOL. If you are just heading into retirement, and you and your partner are in good shape/health, There may be a semi-retirement home first. I strongly recommend you look at your day-to-day financial budget and plan for it as best you can in these economically dreary days. I am just going into semi-retirement, and my partner retired early a dozen years ago and we are doing OK, BUT I can tell you what was a very generous retirement income then, isn't now. Don't get yourself 'house poor'.
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I am an attorney and handle probate sales. I really would be happier if buyers used certain realtors who have some clue how probate sales go. There is nothing worse than buyers getting an arrogant "know it all" realtor who actually does not know what they are doing in an area that is a little different. If the bank officer wants to sell the property (and they are anxious to do it) then directing you to somebody who will sell that property and knows how to do a bank sale seems sensible. An outside realtor might just direct you to one of their own listings and the bank would lose a sale. Yes, they are giving you inside information as to what they will accept--other sellers who are anxious will do the same thing. I don't understand the problem; the bank isn't supposed to pretend to be coy--a real estate owned property is a black mark against the bank. They made a mistake lending money --they want to sell usually. I have never received kick backs from anybody I deal with--escrow companies, etc. but its so much more work dealing with people who claim they know how to do certain types of sales and do not. Usually about 1 day before the close--suddenly they realize that a city needs to do an inspection, the lender needs a second set of Certified Probate Letters, etc. We call & write often --do you need anything? but it doesn't help if you are dealing with a "know it all".
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"I found out that my realtor will get about half of his commission. There is a program with the bank in which they take a percentage of my realtor’s Commission and use it to reduce my closing costs. They are taking $300 from his commission and applying to my costs. Should I take it or let him keep it?" Again, I'm not sure why any of this is your problem or why you have been made privy to the information, other than because you asked and he told you. This "bank program" also sounds completely made up to me - perhaps the realtors on this thread can weigh in, but I have never heard of such a thing. When we bought our house recently, my bank and my realtor had absolutely nothing to do with each other. How are you verifying all of this, other than taking his word?
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mpinto
15 years ago
In my area commission is paid on selling price unless otherwise stated.
ncrealestateguy
15 years ago
Gross selling price, unless otherwise agreed upon.
berniek
15 years ago
Line 227 shows the TOTAL commission and lines 264/5 what the listing company offers the buyer agent out of the total.
In Denver this could mean, line 227 6% (3.2% going to listing company) and lines 264/5 2.8%.

Here is a link that might be useful: Colorado Listing Contract
babs77
Original Author
15 years ago
Thanks all. Berniek, thanks for the link. My contract looks quite different from the one in your link, but after looking at it again, under "Compensation to Brokerage Firm" I do see where is states "5.0% of the gross sales price in US dollars."

Didn't catch that earlier.
berniek
15 years ago
"My contract looks quite different from the one in your link,.."

Interesting, the link provided is the only authorized contract to be used by an agent in Colorado, unless the agent also is an attorney and can write their own contract.
babs77
Original Author
15 years ago
Interesting yes! He is not an attorney, as far as I know. My contract is defintely different from yours. Now, not sure what to make of it. Any suggestions? Or just let it go "as is"? To be clear, I have a great relationship with my REA, but just had the initial question about how commissions work on a house you get full asking price for minus buyer's closing costs...
berniek
15 years ago
"The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission. (LC50-10-06) (Mandatory 1-07)"

Above are the 1st 2 lines in the contract, note the word "mandatory". Ask if itÂs a standard approved Colorado contract, if not, IÂd have an attorney review it and probably report the agent to here:
http://www.dora.state.co.us/Real-estate/consumer/index.htm

As to commission and closing cost, you probably pay first the commission off the sales price (ie. $135,000-5%=$128,250-$4,000 closing cost=$124,250). If you were to pay the closing cost first and than the 5%, you would save $200.
It all depends on how your listing contract and purchase contract is written.

Here is a link that might be useful: DORA Consumer Corner

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