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Buying and Selling Homes

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

13 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)?

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Comments (9)

dave_donhoff
13 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
13 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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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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mpinto
13 years ago
In my area commission is paid on selling price unless otherwise stated.
ncrealestateguy
13 years ago
Gross selling price, unless otherwise agreed upon.
berniek
13 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
13 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
13 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
13 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
13 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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