Are Real Estate Commissions Based Net Sales Price?

Any commission based on a sale is negotiable.  A listing agreement may or may not contain a clause for seller concessions to be excluded from the calculation of the amount due from the sale of the property.  The key is often if it is a negotiation to bring about an accepted purchase offer.  If an owner agrees to a concession of $2500, for example, he may state to the listing agent that he will concede that amount if the commission is based on the net sale price.  In some cases, an owner may at the time of listing or during the period of the listing, offer a $2500 contribution to buyer closing costs as an enticement to bring about a contract.  In cases such as that, the $2500 concession may or may not have commission due to the Realtor.  There is no hard and fast rule that says commissions must be based on a net sales price.

A listing agent does work for the seller.  And, therefore, the seller is largely in control of what to pay the agency.  Sometimes a flat rate is negotiated no matter what the sale price ends up being.  And sometimes, an agency may take a smaller percentage than they normally might take based on the property.  The important thing to do is to ask up front what might happen with any sales concessions that might be necessary to bring about a valid contract.  Most agents I have worked with over the years have taken a flexible stance.

Tax considerations should be considered as well when giving concessions.  If you are faced with a capital gain possiblity, many expenses associated with the sale reduce the tax basis.  You should consult with your tax preparer to be sure, however.

In any event, many markets that have a lag in housing sales are more apt to use concessions than those markets that are in balance or are very brisk.