Buyer Agents Be Flattered by Commission Cut Requests

Negotiation
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I just today had an experience that I realized seems to crop up a lot in my deal negotiations for my buyer clients. I am a dedicated buyer agent, so I don't take listings. I believe that I do everything I can legally and ethically to get the best deal for my buyer clients. Today I realized that something that normally annoys me should be something I look at with pride ... "reduce your commission requests."  I know that sounds strange, but read on for a true story that explains my attitude.

I'm working on a deal and on our third counter offer for a home between $600k and $675k, the asking price. We've come down in the negotiations to a point where the listing broker asks me if I'd be willing to let the listing commission be reduced from 6% to 5%, cutting my commission from 3% to 2.5%. This has always really annoyed me, as I normally work with a client for a long time in this vacation home market. In this case it was almost two years.

Previously we worked on an offer and the negotiation died with the buyers and sellers around $40k apart. It didn't work out, and I really didn't think it would from the beginning. My buyer clients had a top end which would keep them out of the jumbo loan market with the amount they had for a down payment and closing costs. They definitely were looking for a deep discount, and I was trying to help them to get it.

This negotiation was going better, with the seller motivated and making some significant cuts in their counter offers.

Of course, my buyers seized on this as desperation and started reducing their top end accordingly, but that's human nature. It's not my job to tell my buyers what to do, but to advise and serve. They did ask my advice, and if they had taken it the deal would have been done without any commission negotiations.

However, they decided to take another bite out of the apple, and this resulted in the listing agent telling me her client wanted us to take commission cuts to make the deal work.

I wrote a long email response and copied my clients. In it I outlined the reasons why I would not consent to a commission cut. At the time I'm writing this, buyers and seller are $7000 apart on a deal in excess of $600,000. I don't know if the sellers are actually at the point of writing a check at closing because of their mortgage, but if not, they're close. The problem I have with this situation revolves around these points:

  • the sellers may be just pulling a common negotiation tactic out of the hat to increase their cash out of the deal.
  • or, the sellers may actually be getting below their bottom line and trying not to bring a check to closing, but this isn't something they didn't foresee going into and through these negotiations.
  • the listing agent, when the listing was taken, may have even counseled her clients to not list below 6% for fear some agents wouldn't show the home, not something that would ever enter my mind over a half percent.
  • my job is to help my buyers to get the best deal possible, and I've been working diligently to make that happen, so why would this require taking less compensation for doing my job well?

    I realized something in my attempt to explain to the listing broker why I had no intention of cutting my commission to make the deal work. I realized that I bump into this a lot, and there's a really good reason for it ... I bring my clients' negotiation to this point for the seller frequently. So, while it's annoying, I realized that I should be proud that I am doing a good job and my clients have brought the seller to a point where they feel the need for tactics that bring the agents' commissions into play.

    I'm going to look on this situation differently in the future. I want this commission cut request, as it means I've helped my clients to reach a point in the negotiations where the seller is looking for other approaches.