In the process of selling our house, the buyers requested that we pay for a new roof which costs $6000. The realtors (buyer's and seller's) fixed a contract where that money goes into an escrow account for the buyers and is given to them when they replace the roof. The realtors had already had us paying closing costs of $3000 + appliance, furnace, a/c insurance of $500. They figure that the commission is on the $9500 that we pay. To me and our realtor agreed that the selling price has been reduced by $9500 but they still want me to pay their commission on that. I can handle the $3500 but I hate to pay on the other $6000 since I could just hire a roofer to do it myself and the sellers have said that I could get another estimate if I desired. The estimate given is for removing shingles, felt, etc and putting all new on. I'm ready to get an estimate for just putting new shingles on though that wouldn't be so hot since there are shingles that are puffed up. Any advice would be appreciated.

What does your contract with the realtor say about commission?

Commission is typically paid on the purchase price as shown in the contract. If the purchase price is $100,000 and the agreement provides that $6000 of that will be held in escrow and applied to the cost of replacing the roof then yes, you should be paying a commission on that amount. Also, if the agreement provides that you will be crediting the buyers with closing costs of $3000 and $500 for appliance insurance then yes, you should be paying a commission on that as well.

The purchase price hasn't been reduced by these amounts--it is the final proceeds of the closing payable to you that is being reduced. The commission is based on the purchase price before credits.

If you feel that you can have the roof replaced for less than $6000 then you should provide the buyers with an estimate for the lesser amount and have that amount held in escrow. You can try to get the buyers to agree to merely having new shingles installed but that probably won't go over well.

Whenever I represent a seller I always advise them that it is best to give the buyers a credit for repairs and let them have the work done themselves. If the buyers request repairs and the seller does the repairs it always seems that the buyers are unhappy with the quality of the work and it takes forever for a closing to go through. Also, if the work is done improperly the seller remains liable for it even after closing has occurred. The seller is better off just giving the buyer a credit for the cost and walking away with no further liability after the closing.

If you're paying the realtors a commission of 6% then it will come to $570 for the credits you're giving the buyers. You could end up spending far more than that on trying to deal with post-closing problems if you choose to do the repairs yourself.

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Originally Posted by ScottGem

What does your contract with the realtor say about commission?

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Thanks for responding! Commission is based on selling price. They've written the selling price though to include the $9500 that I have to pay out of the selling price.

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Originally Posted by LisaB4657

Commission is typically paid on the purchase price as shown in the contract. If the purchase price is $100,000 and the agreement provides that $6000 of that will be held in escrow and applied to the cost of replacing the roof then yes, you should be paying a commission on that amount. Also, if the agreement provides that you will be crediting the buyers with closing costs of $3000 and $500 for appliance insurance then yes, you should be paying a commission on that as well.

The purchase price hasn't been reduced by these amounts--it is the final proceeds of the closing payable to you that is being reduced. The commission is based on the purchase price before credits.

If you feel that you can have the roof replaced for less than $6000 then you should provide the buyers with an estimate for the lesser amount and have that amount held in escrow. You can try to get the buyers to agree to merely having new shingles installed but that probably won't go over well.

Whenever I represent a seller I always advise them that it is best to give the buyers a credit for repairs and let them have the work done themselves. If the buyers request repairs and the seller does the repairs it always seems that the buyers are unhappy with the quality of the work and it takes forever for a closing to go through. Also, if the work is done improperly the seller remains liable for it even after closing has occurred. The seller is better off just giving the buyer a credit for the cost and walking away with no further liability after the closing.

If you're paying the realtors a commission of 6% then it will come to $570 for the credits you're giving the buyers. You could end up spending far more than that on trying to deal with post-closing problems if you choose to do the repairs yourself.

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Good answer! I asked I could use the approved roofer and pay him prior to closing - she said they would have to rewrite the contract. What bothers me is that the appraisal is about $20000 over what the buyer is going to pay for it. It seems unethical to pay a commission on what I have to pay. I'm just sounding off. Thanks for listening!

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Originally Posted by Leeba

Thanks for responding! Commission is based on selling price. They've written the selling price though to include the $9500 that I have to pay out of the selling price.

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So you are saying, you asked $100K (or whatever) and that's what the buyers agreed on, but The realtors have put a selling price of $109,500 in the contract? And then asking for commission on the total? That seems shady. But the problem is if you signed that contract, with that purchase price, then you agreed to it, and fighting will, as Lisa says, probably cost more than the extra commission.

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Originally Posted by ScottGem

So you are saying, you asked $100K (or whatever) and that's what the buyers agreed on, but The realtors have put a selling price of $109,500 in the contract? And then asking for commission on the total? That seems shady. But the problem is if you signed that contract, with that purchase price, then you agreed to it, and fighting will, as Lisa says, probably cost more than the extra commission.

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I agree. Thank you for seeing my point. You would think they would be satisfied with getting the $6200 on the actual selling price rather than sensing the need to get whatever they can without any concern for ethics. Have a great year!