Q: Does Oregon law cover who pays the real estate commissions on the sale of a single-family home?
The listing broker apparently set the list price at just slightly above the balance on the loan. The broker representing the buyer (us) did inform us of the fact that the list price was about the same as the loan balance and of the fact that, consequently, the seller (and the seller's bank) could not accept any offer lower than the list price. We offered the list price, and our offer was accepted. The offer and acceptance occurred at least a month ago. Just yesterday we were informed that there was not going to be enough money in escrow to pay any commissions. Moreover, the existing loan, we were told, has interest accruing that the seller can no longer afford to pay. So now the sales price has to be adjusted upward to cover the commissions, and we have to pay about $50 a day interest on the seller's loan from March 1 until the close of escrow scheduled in April.
A:
Sounds like the brokers are jerking you around. What does the contract say about who pays what commissions? If they're asking you to allow them to amend the contract to pay their commissions, I believe you could politely decline. Call a local real estate attorney and have them look at your contract. If there are no contingencies that let the seller out or that require you to pay commissions, then just require that the seller fully perform under the contract. If the brokers made a mistake, that's their problem. Go see a lawyer before you agree to anything else.
PS: My comments here are for general information only and not intended as information with regard to your specific situation or applicability of any particular law. They are not offered as an invitation to, nor intended to create, nor do they create, an attorney-client relationship.
A:
This is something that I don't immediately know the answer to but I could research it more to find out. My understanding is that the sales commissions are purely contractual. The seller signed a contract to pay the listing broker a sales commission for the property. I don't know if you have a real estate agent helping you or what the deal was with your agent to pay your agent's commission if you do. Often the buyer's agent doesn't charge the buyer a commission, but rather is guaranteed a share in the commission that the seller's agent would normally get, ie the seller's agent's commission is typically split 50:50.
If I'm right, then we have a seller's agent that screwed up. There isn't enough money in the proceeds of the sale to pay off the mortgage and pay their commission. This would mean that your agent, if you have one, also gets screwed.
I think technically you made and offer to buy at the listing price and they accepted so there is a binding contract to sell to you at that price. I think you can force them to sell the house to you for the price that was agreed. It sounds like there is enough money to pay off the loan. I think the seller's broker/agent is trying to trick you into raising your offer to offset their mistake. I think it would be a very good idea to take your sales documents to a local real estate attorney and see if my assessment is correct. They can do the research and see if there is anything in Oregon Law that would change my conclusion.
A: PS, the seller could also try to work with the bank to accept less the the full payoff of the mortgage, a partial short sale. That would allow money for the seller to pay the commission they owe to the their broker and they could pay off the balance of the mortgage to the lender as an unsecured loan. But since the broker screwed up. they may end up waiving the commission on this deal.
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