🧾 Scenario: Low Appraisal & Seller Tries to Shift Cost to Commission

A buyer is under contract at $525,000.
The appraisal comes in at $510,000 — a $15,000 shortfall.
The buyer requests a price reduction to match the appraised value.
Instead of agreeing, the seller tells the listing agent:

“Have the agents reduce their commission so the deal still works. We’re not lowering the price.”

The listing agent pressures the buyer’s agent to “just cut your commission so it closes.”

⚠️ The Error:
The seller is attempting to solve an appraisal issue by altering the broker-to-broker commission agreement, not the sales price.
The buyer’s agent is unsure whether they can or must agree to a commission reduction and whether the seller can demand it.

Key issue:
Commission is not a negotiable buyer/seller contract term — it is a brokerage agreement, controlled by the broker-in-charge, and cannot be changed by a seller, lender, or agent.

✅ Correct Handling & Explanation:

1. Appraisal contingency applies to the purchase price only — not commission.
Under SCR 310, if the property fails to appraise, the buyer may:
• request a price reduction
• proceed and pay the difference
• terminate (if clause allows)

None of the buyer’s contractual rights include forcing agents to reduce commission.

2. Commission is governed by the brokerage — not the buyer, seller, or lender.
Under SCR 130 (Section 5 – Compensation), commission belongs to the brokerage, and any modification requires a written agreement signed by both brokers.

3. Agents cannot “volunteer” commission reductions without broker approval.
No verbal deals. No text-message agreements. No “just take less so it works.”
Only the broker can authorize a commission change, and it must be documented on the correct amendment form.

4. Correct response flow:
✅ Buyer requests price reduction via Amendment
✅ If seller refuses and insists on commission change → agent notifies broker immediately
✅ Broker decides whether commission change is even allowed
✅ If no agreement → buyer chooses: proceed, pay difference, or terminate

📌 Contract Language (Summary)
SCR 310 – Appraisal Clause: grants buyer the right to renegotiate or terminate based on appraised value.
SCR 130 – Compensation Clause: commission is payable to the brokerage and cannot be altered without broker approval.

💡 Training Takeaway
When an appraisal comes in low:

Negotiate price, not commission

Commission is never adjusted without broker involvement and written amendment

A low appraisal is a buyer-seller issue — not a “reduce the agent’s paycheck” solution

Always notify Melissa before discussing commission changes with any party