Listing broker wants higher commission split because buyer is agent (me). Is this normal or out of line? 5 Unit multifamily
 Hey folks! 

I’m licensed here in Texas and looking to make an offer on a 5-plex that is not on MLS but has been advertised on LoopNet. I was the backup offer and the current buyer has not delivered. The seller called me and now wants to sell to me for our previously agreed upon purchase price of 450k. I spoke with the principal broker and he said that I should get 1% of the sales as commission for this deal. I suggested that we split the commission 50/50. The principal broker said that since I’m a buyer/agent that it’s not fair for me to get half of the commission.  His argument was that he has been doing all of the work for the selling of the property and that I don't deserve half.  The principal broker said he wouldn’t share the commission agreement that he has with the seller and he was kind of a jerk when speaking openly about commission split.

I’m thinking to put 50% of principal brokers fee on the offer. Ultimately it’s the sellers decision and the seller is going to pay the same fee either way. The principal broker isn’t going to promote my offer to the seller though because of this. He also might construed it to seem like I am being out of line and greedy (am I?) or that the seller will have to pay more towards commission. Should I reach out directly to the seller after submitting? The seller and I have been in communication and get along very well. We have met at the property twice. I've never met the principal broker. I’m debating how to handle this. Other alternative is to make the offer with 2% commission to split the difference.

Would love to hear your thoughts!
[{"id": "i8gdk4n", "text": "Contact the seller directly and tell him you'll do all the work for 3%.", "replies": [{"id": "i8gdxwm", "text": "That\u2019s called sign crossing.  Fantastic way to lose your license in most, probably all states.", "replies": [{"id": "i8gezhk", "text": "Sounds like something from the sopranos.  Realtor mafia has the market cornered.", "replies": [{"id": "i8iw18y", "text": "It's literally a legal racket.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "i8ge5zd", "text": " I think that the listing broker could sue the seller for the commission under the argument that the listing broker brought me as the buyer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i8geacl", "text": "You\u2019re talking about a difference of like $5k of commissions after taxes\u2026just buy the deal", "replies": [{"id": "i8gesii", "text": "This. If OP wants it, this is a small price to pay. The property is the prize!", "replies": [], "depth": 2}, {"id": "i8ggu2g", "text": "The difference between 1% and 3% commission is 9k that I could use towards loan down payment.  So it is a decent amount of money for someone starting out.", "replies": [{"id": "i8ghy50", "text": "Keep in mind you\u2019re paying taxes on the fee, even if it goes directly into your DP.  That\u2019s always a tough pill to swallow when tax season comes around.", "replies": [{"id": "i8gk3j8", "text": "Ahh got it, I didn't think it was.  Hence the $5k comment instead of $9k.", "replies": [{"id": "i8gmwol", "text": "Right.  Good luck \ud83d\udc4d", "replies": [], "depth": 5}, {"id": "i8gvqh0", "text": "I'm in a different state but have seen before or it suggested that instead of a commission that you have to pay taxes on, just take that amount off the price.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "i8hkfbq", "text": "You're right. Make broker feel like he's going to lose you as a buyer on this deal. Play hardball, that's what I'd do ...", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i8gees2", "text": "See what kind of bridge you are burning here and decide if the relationship is worth it in the longer run. If not, go direct. \n\nRule #1 of cre: get paid.", "replies": [{"id": "i8i8v5o", "text": "This \\^\n\nUnless you are the only offer on the table you most likely will not be getting more fees. Welcome to the commercial side of the world. It is a dog eat dog world, you will love it.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i8gemji", "text": "Does the guy have a listing agreement in place with the seller? In my state, the co-op commission is part of that agreement. You can carve out exceptions there, but generally the cooperating broker's commission is dictated by what's in the agreement.  \nIf he doesn't have an agreement, maybe he's not needed in the deal at all.\n\nIf the guy wants you to cut your commission, then you should get an equivalent reduction in the purchase price to do it. The seller will net the same, but that may give him less in gains to deal with, and potentially lower taxes. If you need your commission to put in as equity, then maybe hold your ground.\n\nUltimately, it's the seller who decides whether he's going to take the deal or not.\n\n*if he's not going to share the terms of the listing, then absolutely write it into the contract.", "replies": [{"id": "i8gfs1u", "text": "He does have a listing agreement but my understanding is the co-op commission is not explicitly given a percent as part of that agreement.  I asked for a copy of the agreement and the listing broker refused.  \n\nYes exactly, I wanted to use my commission to put in as equity so effectively I would be putting down 22% on the deal instead of 25%.  \n\nYup I understand the seller is the one making the decision and it doesn't make a difference to the seller how much commission the listing broker vs myself get.  I'm just worried that the listing broker will not present my offer in a favorable tone and may say that I am acting out of line.", "replies": [{"id": "i8gwif8", "text": "The listing broker doesn\u2019t have to provide you a copy of their listing agreement with their client. They owe you no fiduciary. All my listing agreements exclude brokers/agents acting as principals receiving a fee. Plenty of buyers out there who won\u2019t play this game. I\u2019d get used to being turned down on this request until the market cools.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i8gk1iv", "text": "This will not help you now, but in the future use TAR form 2402 (Registration between brokers) to establish the BAC in advance.", "replies": [{"id": "i8gkr2p", "text": "Thanks, I'm used to MLS listings so was not aware of this!  I guess it is futile to try and reach an agreement on this since we are at the offer stage now?", "replies": [{"id": "i8gn6mz", "text": "It's 100% a negotiation. I'm going to assume this is a commercial broker based on your post. Commercial deals are done quite different from residential if that is your primary experience. I'd say that you aren't going to win him over unless you are willing to walk from the deal over this deal point. He probably believes you aren't going to walk over the commission split and is trying to strong arm you. Keep in mind, if he kills the deal over the split, then he probably just violated ethics rules and possibly state law. :D", "replies": [{"id": "i8h0iun", "text": "Thanks!  Yes it is a commercial broker whos also done residential in the past.  Yup, totally I think you've got the right idea.  He is definitely trying to strong arm me.  I've got the email address for the seller and the listing agent.  Thinking to make my offer to both of them and explain the situation outright so the seller knows what is going on.  I think this could avoid the listing broker trash talking me too bad.  This would totally burn a bridge with the listing broker though so I need to debate if it is worth it.", "replies": [{"id": "i8jaykh", "text": "It can be a cutthroat business at times. \n\nI personally think the listing broker is being a bit of a greedy ass, so do what you feel is best.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i8gmzmv", "text": "Imagine going to buy a car and asking the salesman for half the commission because you can sell cars too.  I get this isn\u2019t an apples to apples comparison, but essentially what you\u2019re asking from the seller is an additional 3% discount. On small deals like this I would assume it\u2019s more common, but whenever something like this pops up every broker makes a note of it. If this is a one off deal with a small firm and your fine trying to squeeze the guy for a few grand then go ahead, but I guarantee you that agent will never forget.", "replies": [{"id": "i8h0xdl", "text": "I'm not asking the seller for a discount.  I'm asking for part of the commission.  The seller will make the same amount of money either way.", "replies": [{"id": "i8jx2rp", "text": "Commission for what? You\u2019re the buyer! You as an agent didn\u2019t do anything", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i8gp02g", "text": "In my experience, while split commissions are standard in residential real estate they are a lot less common in commercial real estate. A 5-plex is on the border of multi and resi so it could go either way but as the # of units goes up the less likely it is that a broker would be offering a commission split. The majority of CRE transactions do not involve a buyer broker because the investors are typically more sophisticated and source the opportunities themselves. That being said I think you are right that the broker is not likely to promote your offer when doing so would net them less money and they may be able to find other buyers who they don\u2019t have to split the commission with. The exception would be if your offer is far and above the rest and then they probably don\u2019t have much of a choice, but I don\u2019t know if this is the case here. Ultimately, I think because of the size of this deal you could go either way. You can try to push for the higher commission split but it may end up costing you the deal. As you buy larger deals though I think you will start to find a lot more push back and will likely find yourself at a disadvantage if you try to get a buyer commission. Just my two-cents. Hope this is helpful.", "replies": [{"id": "i8gxdrb", "text": "Very helpful!  I've made other commercial offers before but they were always off the MLS so the commission was understood.  Thanks for the insight.  I don't think they want to re-list the property and the seller called me directly to tell me he wanted to sell the property to me.  So I do have the advantage of the seller and me being in agreement.  I'm just worried that the listing agent would really trash talk me to the seller.  Or in the future it may hurt my reputation?  Should I really worry about this as I don't think my ask is unreasonable?", "replies": [], "depth": 2}, {"id": "i8htorq", "text": "&gt; In my experience, while split commissions are standard in residential real estate they are a lot less common in commercial real estate. \u2026. The majority of CRE transactions do not involve a buyer broker because the investors are typically more sophisticated and source the opportunities themselves.\n\nBingo. Almost never heard of in my world. And in the very rare and unique circumstance where there is another person involved, I find that person does 0% of the work but still wants 50% of the fee.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i8gpulm", "text": "It is typical with commercial properties that listing brokers do not split the commission 50/50 with the buyer's broker; most do not want to split it at all and prefer to just sell it to an investor on their list. You are getting a 1% discount on the property already and for a few thousand more you are risking your reputation. CRE is a very small world. \n\nIn the future; this is a conversation you want to have up front (if you feel 1% is going to make or break a deal for you). I would be more worried about the value-add business plan after you close. If you increase rents by $25 a month; it will increase the value by $5,000. That is where the real money is. Need to change your mindset from broker to investor.", "replies": [{"id": "i8gxw9s", "text": "Thanks!  Yeah totally understood that it isn't going to make or break the deal.  If another agent brought a buyer would they not split the commission 50/50?", "replies": [{"id": "i8h341e", "text": "Typically not on commercial properties; we just sold a property; it was 62.5%/37.5%; most to the listing broker.", "replies": [], "depth": 3}, {"id": "i8h5oft", "text": "I have 6 industrial properties and my wife got a 2.5-3% buyer broker commission on all of them.  These were 250k to $1.5 million size properties. I don't feel like there's any standard.  It can vary from deal to deal.  I wonder what the owner of the thing you're buying would think of his broker taking 5% and the buyer broker only getting 1%.", "replies": [{"id": "i8h68s4", "text": "He may find it unfair.  He was very impressed when I told him I have my license and am representing myself.  He also went with the previous buyer per the brokers recommendation and he wanted to sell to me.  But previous buyer offer faster close (them hard-money me through local bank).", "replies": [{"id": "i8h8ktk", "text": "I'm sure that broker isn't willing to work as a buyer broker for 1% on a 450k property.  It would be one thing if they wanted to leave that extra 2% for the buyer, but the selling broker wants to just have it!  Pretty lame.  If the numbers of the property look good for you and you definitely want to buy it, then I agree with the advice others have said to just let the idiot have their commission if that's what they want.\n\nCommercial is a whole different beast from residential.  Lots of commercial brokers will look at you like a complete idiot because you're a residential agent.  It's just how it is.  My wife and I have been treated that way many times.  But we've been treated very fairly and kindly by a few, so we've still been able to get properties that we wanted.\n\nThis broker doesn't view you as anyone that's ever going to be a counterparty for them again so they want to get everything they can out of this one commission.  Anyway, good luck!", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i8huk6u", "text": "A 5plex for 450k in Texas? Im in Austin and this might get you a cardboard box under the highway", "replies": [], "depth": 1}, {"id": "i8ibp4k", "text": "In the end, you are not \"entitled\" to a buyer broker commission in CRE BUT if you have leverage you can use that to negotiate one. If there is other interest/demand the listing agent can push back and steer the deal elsewhere.\n\nIf not and you are the one solid offer on the table, throw it into the deal and stand firm. They'll figure something out on their side. Write the email to the broker with the seller cc'd and clearly state your position.\n\nThat's my 2 cents.", "replies": [], "depth": 1}, {"id": "i8j1hqs", "text": "You are entitled to whatever part of the commission the seller is paying to the broker if there's a cobroker fee. The seller should also have a copy of the listing agreement so if the listing agent won't provide it and you have contact with the seller then ask them. If it was a regular buyer and you were representing that buyer he'd still have to pay you the same amount if there was a cobroker fee. They don't deserve anything extra for doing what they were hired to do as an agent. If you really want the deal then do what's necessary to get it but don't let the agent pull a fast one on you either. You can write an addendum to give your agent commission to the buyer which is yourself.", "replies": [], "depth": 1}, {"id": "i8j2o5d", "text": "Not a broker, but I can and have dropped deals because a broker wanted to charge me too much. Every seller\u2019s broker says stuff like \u201cthe seller is paying me 5% out of his sale proceeds, you aren\u2019t paying anything\u201d and then I have to explain that the extra $100k is coming out of the seller\u2019s pocket \u2014 and therefore, my offer is lower for all intents and purposes.\n\nI would tell the other broker 50/50, or agree \u2014 and then lower your offer so that his commission is the same as it would be at 50/50. Tell the sellers broker to eat shit or get his client to eat shit, his choice.", "replies": [], "depth": 1}, {"id": "i8jfim6", "text": "Completely standard, just buy the deal and don\u2019t try to double dip. Fees are for brokers", "replies": [], "depth": 1}, {"id": "i8k0fkj", "text": "I own a REPE and run into these situations. The listing broker is attempting to use leverage. \n\nI would write your offer with a 50/50 split on the commission. Assess the offer to the owner in C/O of the broker with a line item titled: DELIVERED TO PARTIES VIA USPS \n\nThen send the offer to the broker, and overnight the offer to the seller. \n\nThe broker might get his feathers ruffled but it\u2019s the sellers decision who to sell the property to. Put a well written cover letter on the offer telling the seller who you are, your financial capabilities to perform, and why you\u2019re the best person to buy the property.\n\nAll the best", "replies": [], "depth": 1}]