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re: Buyer paying the Buyer Agent a fee
Posted on 10/11/16 at 7:19 pm to LSUFanHouston
Posted on 10/11/16 at 7:19 pm to LSUFanHouston
quote:
Under new system, house goes under contract for 485K. To get the selling agent the same 15K, we would switch to a slightly higher commission rate. So now you have a sales price of 485K, seller pays 15K commission so he clears 470K, and buyer also pays a commission of 15K, which he finances into the house. The total lent is still 500K. The appraisal price is still 500K. Nothing changes.
Except lenders base the value of the property on the lesser of the appraised value and the contracted price and that number is what the loan to value is based off of. In your scenario they would only lend $485K even at 100% LTV.
1
Posted on 10/11/16 at 8:18 pm to MikeBRLA
quote:
Except lenders base the value of the property on the lesser of the appraised value and the contracted price and that number is what the loan to value is based off of. In your scenario they would only lend $485K even at 100% LTV.
Correct.
As I said earlier, it would take a change in lending practices to make such a situation work.
What I was trying to prove is that mathematically, it makes no difference.
But it would take a change in how we do lending. It would be a huge change to the entire buying process, to be honest.
It could certainly be done. Will it? No way.
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