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Roger
Roger, Lawyer
Category: Real Estate Law
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Can I as a real estate seller in Tennessee stipulate

Customer Question

Can I as a real estate seller in Tennessee stipulate anything in a counter offer /
Such as:
Counter offer $725,000 and 1% reduction in Realtor's commission?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Roger replied 1 year ago.

Hi - my name is ***** ***** I'll be glad to assist.

Generally, yes you can make any demand in a counter-offer that you like. However, if you're the seller, you likely have a listing contract with the realtor, and that cannot be changed by these negotiations because it doesn't involve your relator/and because your realtor must consent in order to make this change.

Expert:  Roger replied 1 year ago.

Your better option would be to reach out to your relator and tell him/her that you'll make a certain counter-offer IF he/she agrees to a reduction in commission.....if so, you and the realtor an make an agreement based on the resolution you reach.

Expert:  Roger replied 1 year ago.

Thus, the buyer would likely agree to this because it doesn't affect him/her because the buyer isn't paying the realtor's fee. So, your issue is really with your realtor. One alternative is that you could ask the buyer to pay part of the closing costs, which would have basically the same affect on things.

Expert:  Roger replied 1 year ago.

Please let me know if you need anything further. Also, please take time to positively rate our conversation so I may receive credit for assisting. Thanks!

Customer: replied 1 year ago.
I as the seller am represented by a licensed realtor in Tennessee as is the buyer.
My realtor has agreed to accept the 1% reduction (5% v 6%). However, the buyers real estate agent refuses (totally absent of his buyers knowledge). Again, can I as a seller legally stipulate in my counter offer:
"Counter offer $725,000 with a 1% reduction in buyers/sellers real estate commission"
Expert:  Roger replied 1 year ago.

I practice in Tennessee, and as I said above, you can make this part of your counter-offer, but if this was agreed to or accepted, the agreements you and the buyer have with your respective realtors would have to be amended.

Expert:  Roger replied 1 year ago.

In other words, all parties (buyer and his/her agent and you and your agent) would have to agree to this change before it would be enforceable.

Customer: replied 1 year ago.
The buyer would likely be willing to accept the counter of 725k and the 1% real estate commission - BUT HIS REALTOR REFUSES and I'm told I cannot expose the real estate reduction in my counter to the buyer. So the buyer doesn't know because my Realtor refuses to expose mention of the reduction to the buyer as part of the counter offer. Otherwise, if the buyer knew,
he would accept the counter or fire his realtor for refusing to accept the 1% reduction commission; especially unbeknownst to the buyer.
Customer: replied 1 year ago.
1% real estate commission REDUCTION
(5% v 6%)
Expert:  Roger replied 1 year ago.

Your counter offer is not binding on the buyer's realtor IF the buyer accepts.

Expert:  Roger replied 1 year ago.

As I said above, EVERYONE involved (buyer, buyer's agent, seller and seller's agent) would have to agree to the reduction of the fee. So, if the buyer's agent refuses to reduce his fee, then the change will not occur because the buyer CANNOT breach his contractual agreement with his realtor.

Expert:  Roger replied 1 year ago.

So, the counter-offer would fail.......

Customer: replied 1 year ago.
Could you PLEASE respond to my question
in a manner I can understand.....'can I or can I not stipulate in my counter mention of the 1% real estate commission reduction to both seller/buyer realtors
Expert:  Roger replied 1 year ago.

I'm doing my best to do just that....sorry if it isn't clear.

As stated above, yes, you can state what you're wishing to in your counter-offer.....BUT even if the buyer ACCEPTS, it is not a done deal.

Expert:  Roger replied 1 year ago.

It's not a done deal because you and the buyer have contracts with your respective realtors, and you must honor those contractual terms. SO, if the buyer's realtor is due a certain commission from the sale of the property, and the buyer now wants to reduce that commission, that can ONLY happen IF the buyer's realtor agrees to the reduction.

Expert:  Roger replied 1 year ago.

I've done some additional research on this issue........and what I've found says that it is really not appropriate to include fee reductions in OFFERS and COUNTER-OFFERS because realtors are not parties to the purchase contract (which is what I've mentioned above). Commissions, including the amount to be shared by the listing office with the buyer's agent, are determined as a result of separate contractual agreements; and nothing agreed to only by the two parties to the purchase contract can change that.

Customer: replied 1 year ago.
The buyer hasn't a clue about our counter of 1% reduction in commission!'
That's the premise of my question Counselor ! Again, can I stipulate in my counter the mere mention of a 1% reduction in commission WHICH HIS AGENT HAS REFUSED TO PROFFER TO HIS CLIENT, THEREFORE TOTALLY UNKNOWN TO HIS CLIENT/BUYER.
Expert:  Roger replied 1 year ago.

Also, if the buyer's agent is a member of the National Association of Realtors, it is POSSIBLE that writing the offer as suggested would be contrary to the NAR Code of Ethics, to which all Realtors subscribe. Standard of Practice 16-16 refers to using the terms of an offer to attempt to modify a listing broker's offer of compensation and the issues that could arise. The logic of this, clearly, is that the offer cannot be used as a tool to reduce the amount of commission for which the listing agent has contracted. The reasonable presumption here is that there is only so much commission to go around, and any increase to the buyer or tenant's agent would result in a decrease in that which goes to the listing agent. But that result is just what is happening in the scenario we have envisioned. By the same reasoning, then, it would be unethical for a Realtor to construct such an offer, even if his principal wants him to.

Expert:  Roger replied 1 year ago.

So, based on all of this, it is really futile or not necessary/relevant to include this in the counter-offer because the buyer's realtor is the ONLY one who can make the decision to reduce his fee.

It doesn't matter what the buyer wants to do and the buyer CANNOT agree to the reduction if his agent doesn't want it ---- which is what you can deduce from the fact that the buyer's realtor refuses to tell the buyer of this option.

Expert:  Roger replied 1 year ago.

Thus, if the buyer's realtor refuses to tender the offer at a reduced commission to the buyer, then that's really where it is going to end......because the buyer has no authority to force his realtor to reduce his fee.

Customer: replied 1 year ago.
Bot***** *****ne without being legally verbose is
NO I CANNOT STIPULATE SUCH IN MY COUNTER OFFER. Correct? Whew!
BUT what if the buyer asks his Agent to accept the 1% reduction to facilitate closure in his client's behalf - And, if his
Realtor refuses, the buyer fires him and seeks another realtor that would be amenable to his counter?
Expert:  Roger replied 1 year ago.

That right -- if the buyer's agent isn't agreeable, then you're not going to get anywhere....and that's exactly what the buyer's realtor is trying to avoid with his client by not presenting this --- he doesn't want to be forced into having his client ask him to do this to close the deal......

Expert:  Roger replied 1 year ago.

If the buyer wants his agent to take the reduction, and the realtor refuses, that would be a contact issue between those parties, and how things would shake out depends on what their contract says.

Expert:  Roger replied 1 year ago.

But, if the contract expired, it could be possible that the buyer could buy the property with a new/different realtor (again, depending on what the contract between them says).

Customer: replied 1 year ago.
But if the buyer becomes aware of what the seller (MOI), wanted (i.e. 1% reduction) and knowing his Realtor refused to expose or otherwise proffer to his client what the seller wanted to stipulate in the counter, but not permitted IAW existing real estate laws,
can he fire the bum and go elsewhere in hopes of closing with another realtor that would accept a 5% commission?
Enough as I'm exhausted!
Expert:  Roger replied 1 year ago.

I don't know that this would be grounds to fire his realtor (without exposing himself to liability) because he's contracted to a certain fee......so if he fires the realtor, he's probably going to get sued.

Customer: replied 1 year ago.
He should be able to fire his Agent for failure to expose what the seller intended to enumerate which was most likely in concert with the buyers desire to purchase at the 725k and a 5% commission that the sellers agent agreed to.
Stop and practically think about it. His Agent stands to gain 20k at 5% or lose 24k for being a self serving Realtor.
Signed
Don G Tyson
LT (SEAL), USN, Ret.
Expert:  Roger replied 1 year ago.

I understand what you're saying, but the buyer's agent has a contract for a certain fee, and if he wants to put $20k at risk for the other $4k, that's his call.

Expert:  Roger replied 1 year ago.

The buyer's realtor may tell you the same logic --- that if you're willing to risk the sale for the 1%, that's your call.

Expert:  Roger replied 1 year ago.

....and you'd both be correct -- it's up to you if you won't do the deal with the 1% included, and it's up to the realtor if he won't reduce his commission.

Customer: replied 1 year ago.
Any contract I've ever had in the seven homes I sold stipulated I could fire my agent anytime as well as a buyer if I perceived failure in full disclosure - which this greedy Realtor appears to be doing.
Expert:  Roger replied 1 year ago.

I've never seen that in a real estate contract, but it is certainly possible that you're correct. Obviously, all that matters in this case is what is in this particular contract.

Expert:  Roger replied 1 year ago.

Also, if you believe that the realtor for the buyer isn't acting within the rules that govern him, you can report him to the Tennessee Real Estate Commission (https://www.tn.gov/commerce/section/real-estate-commission).

Expert:  Roger replied 1 year ago.

But, what the realtor is doing isn't likely improper because his commission agreement is not part of any deal you and the seller reach on the sale of the property. That's what the realtor rules above are referring to -- that the commission set by separate contract should not be used as a bargaining chip in negotiating the sale of the property.

Expert:  Roger replied 1 year ago.

Hi - If you need anything further, please let me know. If not, please take time to positively rate our conversation so I may receive credit for assisting. Thanks.

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