Entry by Glenn Freezman

The Buy side commission if prepaid by the task prior to closing

Is it a fair assumption that when working with buyers within the ACRE model a home buyer can expect the home to be reduced by the actual buy side commission that would normally be paid at closing since the buyer paid for his/her services all along? For example: If a home is listed for $410,000 and is negotiated by all sides to $400,000, can an amendment to the agreement of sale be drawn up to reduce the home to $388,000. (assuming a 6% commission) and be signed by all parties. Thus not only reducing the home price by the 3% after the final negotiated price but also affording a decrease in the amount of transfer tax needed to be paid by both sides?

1 Comment

Hi Glenn:

The answer, from my perspective, has to start with a "yes, but!"

ACRE® is more a philosophy or a state of mind than it is a business structure, consequently there is no specific ACRE® business model. This enables ACRE®s to innovate and adapt their many business models to the needs of consumers within the constraints imposed by a variety of regulatory frameworks. Neat, eh!

I think the scenario you describe has merit, appears workable and would offer the benefit of reduced transfer tax as you astutely suggest.

Another way to do this hypothetical deal would be that the buyer's agent could collect the co-broke and rebate the difference between the co-broke and his fee back to the buyer at closing. I believe there may still be some jurisdictions where this is seen as a rebate to a non-licensed person and, therefore, illegal.

In jurisdictions, such as mine, where professional fees attract state or provincial sales tax, your scenario, above, would also provide a benefit to the seller.


This page contains a single entry by Glenn Freezman published on July 2, 2010 2:19 PM.

Attention ACRE Brokers (and all others interested) was the previous entry in this blog.

Interesting Post on AR: Buyer Asked for 50% of my Commission is the next entry in this blog.

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