A Buyer’s Rep Foregoing Commission

The commission is set out in the Listing Agreement. There may be an amount offered to the co-operating brokerage. The Buyer’s agent proposes to provide a benefit to his own client.

That’s fine, but in this scenario he wants to bump up the benefit by not paying the split to his own Brokerage, not paying the HST and not paying income tax. Beyond that, he is asking the Listing Brokerage to co-operate with him in all of this, notify the other buyers’ agents and destroy his own (Listing Agent’s) reputation as an ethical agent.

So, if the Listing agent goes along with this, they have to re-negotiate their Listing Agreement with their Seller. The Buyer’s agent can’t do this. The Listing Agent is the only one who can. Once there is a reduction agreed to by the Seller, this information has to be passed on to the other participants. Once the Listing Agent does this, they will have no one participating in the bidding war next week on another property. That’s the risk!

Consequently, all the good agents simply say “no”, they will not renegotiate their commission agreement with one of the bidders to the possible detriment of the others. All the goodwill associated with “please bring me an Offer” in future deals will be lost. The Listing agent probably became successful by handling other agents fairly and equitably. That’s why there are 10 offers on offer night, not one! There was a commission, and now on offer night, there’s no commission. Nice!

It would be simple and easy for the Listing Agent to say, if you don’t want your commission, that’s fine, I’ll keep it. That keeps the playing field fair. And further indicates to the Buyer’s agent, if you take your commission that is offered, split it with your Brokerage, pay the HST and pay your income taxes, and then you can DONATE whatever you have leftover the Buyer.

This way, the system at least stays fair for everyone.

Brian Madigan LL.B., Broker


Leave a Reply

Your email address will not be published. Required fields are marked *