Buyer agreement says 2.5%, seller's off-market terms say 1.5%. $6.4M house, $64k hole.

Question

Off-market deal, seller's agent sent terms before anything is papered. Purchase price is going to land around $6.4M. My buyer-broker agreement with the client is 2.5%, so $160,000. The seller is offering 1.5% to the buyer side, so $96,000. That's a $64,000 gap and nobody has said out loud who's covering it.

Options as I see them: buyer pays the difference in cash at closing, I cut my fee, or we ask for a $64k seller credit and push the price up to cover it. Third option makes the seller whole on net and the buyer finances the difference, but it's contingent on the appraisal supporting the higher number and on the jumbo lender allowing a credit that size. Has anyone worked through which of these actually survives underwriting at this price point? And is cutting to 1.5% once a permanent reset with this client and everyone he introduces me to?

Rena Expert · Accepted Answer

Start with what the two documents are. Your buyer-broker agreement is a contract between you and your client for $160,000. The seller's 1.5% is an offer to a third party that reduces what your client owes you out of pocket. It doesn't amend your agreement and it doesn't obligate you to accept it as payment in full. If the deal closes at $6.4M and the seller side pays $96,000, your client owes the balance unless you agree in writing to something else. Get whatever you agree to signed as an amendment before the purchase contract goes out, because after that the conversation happens with a closing date pressing on it.

On the mechanics of your third option, seller credits are subject to lender limits and to how the credit is characterized on the settlement statement. Jumbo portfolio lenders set their own caps and some are stricter about broker compensation credits than about closing cost credits. That's a written confirmation from the specific lender on the specific file, not a general rule you can plan around. Grossing the price up by $64k also has to survive the appraisal, and at $6.4M with an off-market comp set the appraisal is the loosest number in your model. There can be tax consequences to how the payment is structured for your client, which is a CPA question.

The repricing risk you raised is the one I'd weigh heaviest. Luxury clients at this level talk to each other, and a fee that was cut once gets quoted as your fee by the person who introduces you to the next seller. If you're going to move, move on this transaction only and say so in the amendment, in writing, with a reason tied to the seller's terms rather than to your value.

What you haven't mentioned is whether the seller's 1.5% is even firm. Off-market sellers who set a number before there's a buyer often move once there is one.

carlos_nunez · Answer

The gap only matters if the buyer can't write the check, and at $6.4M he almost certainly can. But I've watched people wire seven figures without blinking and then get genuinely irritated by a $64,000 line item they've never seen itemized before. Have you put your fee in front of him as a dollar figure yet, or has he only ever seen 2.5%? That conversation goes very differently depending on the answer.

omar_haddad · Answer

If there's any deferred work in the house, push the seller on price instead of on your fee. Sellers treat a price reduction and a credit as completely different animals even when the dollars out of their pocket are identical. $64k off $6.4M is a rounding error to them and it's a fee cut to you, and only one of those two numbers follows you to the next client.

jordan_ellis2 · Answer

Question from someone with no deals: is the 2.5% in your agreement a ceiling or a floor? The template form I was handed to read said something like "the greater of the stated compensation or the amount offered by the seller" and I couldn't work out how that's supposed to function.

devon_pierce · Answer

Pike, that "greater of" wording is what the new buyer agreements were largely written to get rid of. The idea now is that the buyer agrees to a set number and anything the seller pays goes against that number rather than on top of it. Forms differ by state and by brokerage though, so read the one actually in front of you rather than the one someone posted online.

aliyah_b · Answer

What does the $160,000 actually turn into for you? On a 70/30 with a transaction fee and any referral out, the difference between $160k and $96k gross might be a $45k swing in your pocket rather than $64k. Not that $45k is nothing! I'd just want to know the real number before deciding how hard to fight.

megan_doyle15 · Answer

So the seller can just decide not to pay the buyer's agent at all now? Genuinely asking, I thought that was the whole point of the listing commission.

marcus_hale41 · Answer

Whatever you land on, make the paper agree with itself. The buyer-broker agreement, the amendment, the purchase contract and the settlement statement should all show the same figure and the same label. An underwriter on a jumbo file who sees $96,000 of broker compensation on the statement and 2.5% in the executed agreement will ask what happened to the other $64,000, and that question tends to arrive two days before closing when everyone is already booked on a flight.

Buyer agreement says 2.5%, seller's off-market terms say 1.5%. $6.4M house, $64k hole.

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