Paying commission, Cancelling a listing


Dear David,

In a recent column dealing with “no commission” real estate companies, you noted a great number of these sales involve a Realtor negotiating for the buyer, and that the homeowner would still have to pay commission to the buyer’s Realtor.

As a seller, how do I justify paying the buyer’s Realtor for the privilege of having them negotiate against my position? It seems logical that the buyer would pay their own Realtor’s portion of the commission, in order to avoid a significant conflict of interest. How do Realtors square this circle? – CURIOUS ABOUT COMMISSION

DEAR CURIOUS: Thanks for asking this question, I’m sure there are a number of readers wondering the same thing. Rather than charging commission per se, “no commission” listing brokerages commonly charge upfront fixed fees and may also encourage sellers to pay the buyer’s agent a competitive commission to ensure a successful sale. When professional Realtors are involved on one or both sides of a real estate transaction, their fees are typically paid out of the seller’s proceeds.

When a homeowner considers an offer from a buyer, they are contemplating how much they want to “walk away with” after paying these professional fees. Whether charged upfront or after the fact, the seller takes them into account when deciding what price they are willing to accept.

The seller is the one in control of accepting what they consider to be a satisfactory bottom-line offer. So while the buying agent’s commission is technically paid out of the seller’s proceeds, the buyer has already contributed the funds necessary to cover this cost as part of what they are agreeing to pay for the house.

Pro Tip: Keep in mind that a seller is never obligated to work with an offer. It is always their choice.

Dear David,

Our house isn’t selling. Can we cancel the listing contract and find someone else? – LOOKING FOR OPTIONS

DEAR OPTIONS: A contract is in fact, a contract. Every contract has a beginning time and an end time. If you haven’t reached the end of your contract, both parties will need to agree in order to terminate.

Before you make this move, I would suggest you have a heart-to-heart with your listing agent. This is important, to ensure that you’re on the same page. Have a look at what the market is doing today compared to when you first listed your home. Consider whether your expectations are realistic, based on what else has sold in your area and what other choices buyers have. This may be a great time to fine-tune your approach based on current market conditions.

Pro Tip: there are a number of things we can do to give a listing new life. #AskDavid