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What if you DO have to pay your own realtor?

We are seeing more and more multiple offer situations so it’s only logical that you will have to compete against another buyer who is willing to pay their own agent, and I’ll explain why they would do something so crazy. Then, I’ve got a couple other completely unrelated topics, so we are going to bounce around a bit, but it’ll be entertaining.  Well if not entertaining, maybe at least interesting? 


What happens in multiple offer situations? 


The deal gets sweeter for the seller. The most obvious strategy is for buyers to start offering higher, maybe even above list price. There are other ways to try to stand out, like a faster close,  being fully underwritten, a larger earnest money, free rentback – we actually discussed all of these strategies to make a more competitive offer on an episode of Property Pursuits last year.  When it really comes down to it though, the seller’s bottom line is probably their priority. They want to net, meaning walk away with, the most amount of money. 


So far, we’ve seen a lot of nothing result from a lot of hoopla when it came to the NAR lawsuit on realtor commissions. It’s been business as usual. I can tell you I haven’t closed one loan where the buyer had to pay their own agent yet. But this week, this week I had a deal where we had to ask for less credit because we also needed the seller to pay the buyer’s agent. And the seller countered us back reducing the buyer agent commission from 2.5% to two percent flat. So it begins… 


If you have two offers, both at the same price, but one in which the buyers are willing to pay their own agent – meaning you keep more of your proceeds…which one would you accept? Now you might be thinking, well, why not just offer more on price if you need the seller to pay your agent.  The problem here is we run into appraisal issues. The listing agent will advise their client that the risk in accepting an offer above list price is that if the property doesn’t appraise, that buyer can back out and get their earnest money deposit back. That doesn’t make a seller feel good. 


What if you find yourself in this situation? 

If you are competing (or if you’re a realtor with clients in this position), here’s what you need to know about paying your agent’s commission. 


  1. It can’t be financed. This is considered a closing cost and closing costs can’t be added to the balance of your loan. So you will have your down payment, your typical closing costs like title fees, transfer taxes, inspections – these usually add up to about 2 percent of the sales price – and then your realtor’s commission percentage due out of pocket. 

  2. If the comps (comparable sales of similar properties in recent months) support a higher price, you can consider offering more than list price so the seller can pay your agent and net the same amount. This is risky as I just explained but still worth trying before giving up. 

  3. You may be able to reduce your down payment. If you were planning to put 10, 15 or 20% down – you can put less down, finance more, and set aside the money needed to pay your realtor yourself. 


We are still seeing properties sit, so it’s not like every listing is going to generate a bidding war.  


Week 1 of Trump 2.0 

So much to cover, so little sanity left to do so. Allow me to focus just on President Trump’s demands for lower rates. Yesterday, citing lower oil prices, President Trump said he wants the Federal reserve to cut rates. He actually said he will demand it because he knows interest rates much better than they do, specifically better than Jerome Powell. Trump appointed Jerome Powell in his first term but that’s neither here nor there. Regardless of my politics, lower interest rates would be swell… as long as we don’t end up in the same situation we did following his first term when he demanded zero percent interest rates for such a long period that we ended up in this exact war on inflation. 

The Fed meets next week. 


Isolation is the number one driver of behavior. 

I was talking to a psychiatrist on a wild Friday night at Urban Air. Not my psychiatrist, just a psychiatrist. I don’t have a psychiatrist. Yet. She’s the mom of one of my son’s friends and we were at a 7-year old’s birthday party.  I was talking about behavioral finance. Surprise. It really is interesting, and sad, but interesting to consider the mess my generation has gotten themselves into with credit card debt and buy now, pay later programs in their desperation to keep up with the Joneses. She said you see it all the time, people’s fear of being alone, left behind or isolated being the main driver of their decisions – even over logic and often to the point of harm. 



Don’t worry though, I’ll help you find community in a much healthier way at Mortgage and Mimosas on Valentines Day or the Future is Female in March.  Tickets are on sale now. 

Tel: 775.287.9112 |  Fax: 775.201.7915 | Email: speterson@allwesternmortgage

295 Holcomb Ave Suite 250 -  Reno,NV 89502

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