Section 29 of the RPA is what you are referring to.
Broker compensation from Buyer:
“If applicable upon COE Buyer agrees to pay compensation to broker as specified in a seperate written agreement between Buyer and Broker. ”
Generally this may apply to say a FSBO where the seller is not paying any commission to anybody.
So how does an agent who brings his buyer to the fsbo home and represents the buyer get compensated? Note that in the buyers representation agreement (which would be the “seperate written agreement that is referred to in the RPA above) there is a specific discussion about compensation to the broker representing the buy to be paid by the buyer in such where no compensation is offered from the other side. Thus that is how he/she gets compensated.
Again, (I hope) the point being is that only brokers get compensated. Nobody else ever gets compensated except brokers. Maybe I am getting closer to connecting? No? Don’t give up on me if we are still missing connections…
ps – A last ecample. Say you strike a deal with your realtor regarding a rebate. Assume the listing is offering a 3% CBB and your realtor agrees to rebate you 50% of the commission. He will get 1.5% and you get 1.5%. He will declare that 1.5% as income. You as the buyer will receive a 1.5% credit from the seller directly. You then use that 1.5% to pay off misc closing costs in escrow. Do you declare that 1.5% as income? No you don’t; however that 1.5% went to pay off misc closing costs. Can you adjust your cost basis by those misc closing costs that were paid off by the 1.5%? Most likely no because they were not paid by you. Declaring any of the money as income is (to me) moot because you cannot walk away from the transaction with any cash. Primarly because your lender will not allow that. Maybe back in the shadier days it did happen. I would assume that if you DID walk away with cash then perhaps yes that should be income.
Take the same example where you are not represented. You received no commission because you were not under the employ of a broker. You received a 3% credit for non recurring and recurring closing costs and possibly some repairs/upgrades. This credit was eaten up in escrow by all of the closing costs and repairs and somehow your lender was okay with it. Again, the same logic applies above with regards to adjusting your cost basis as above.
Disclaimer!!! I am not an accountant so I stand to be easily corrected by a tax professional, accountant, FSD, Surveyor, etc…
