Agent's commission on a trade?

[AugustaREGroup]

What is the standard practice?

(ie. a 549K property for sale is listed... a buyer's agent comes along to seller's agent and offers 425K property in same neighborhood plus 100K)

I have a thought of a few different scenarios in my head, but was wondering what is the generally accepted practice in this situation?

[stevetrang]

At the bare minimum, I would expect the seller to honor previous commission agreement. The buyer's agent should get a listing commission for selling the other house. So in all, you each receive 3% of total amount. I'd love to hear the answer to this one.

[AugustaREGroup]

when you say total amount.. appraisal of trade + cash? or what?

[stevetrang]

Both houses + cash or twice the original house, which should be the same.

[Joelrunner]

I don't see any reason the commission should be any different than if it were a financed or cash sale.

Each seller should pay their respective agent the agreed upon commission based on the terms of the listing agreement.

[AugustaREGroup]

@Joelrunner - so you think 12% total. 3% to each listing agent for sold home, and 3% to each 'listing agent' from other seller for getting them a buyer?

(the 549K is a 3-br (Seller A) and the 425K is a 2-br (Seller B).. the 2-br person wants a 3-br, and the 3-br person wants to sell and sees this an alternative for now)

And the 3-br owner should pay another 6% when he goes to list the 2-br for sale?

Seller A is going to pay 12% commission total, and Seller B is paying 6% total..

[Joelrunner]

I'm not going to get into specific listing commission amounts considering the Federal Trade Commission frowns upon that, but I think you're double-accounting on "Seller A".

Regardless, the agents who are facilitating the transaction and bringing a buyer to the table should be compensated fairly. There are dozens of ways it could be negotiated, but I'm only counting 4 "sides" to be negotiated, not 6. Some Realtors might discount the 2nd "side", and some might not. Regardless, that all depends entirely on how it is negotiated when drawing up the listing agreement.

If you don't have a listing agreement in place already, then the cat is out of the bag...

[AugustaREGroup]

My fault on putting amounts, but I still don't see how Seller A will not have to pay 4 sides by themselves. 2 sides for the sale of his property and 2 more sides for the sale of the next property. (Assuming they are using the same listing agent.. the agent will be receive 4 sides)

With Seller B paying 2 sides for the sale of his property

[Joelrunner]

Assuming Seller A has 2 properties, then he would have 2 commissions - yes. (That is - unless the listing agent is feeling generous and wants to work for free on one of the deals ;-)

Even so - in your 3% per side scenario - that wouldn't be 12% total for seller A. It would still be 6% - just 6% of two separate transactions...

[stevetrang]

2 sides per property, so 4 sides total.