Buyers Agents Charging Fees..Good for them

Below is a article from the Real Estate Journal

I retained all the links and other stuff for contacting June Fletcher directly..it is a story about buyers agents charging a fee...I think its a great idea..They only want to charge $395.00 ....thats peanuts, and should be triple that....

Home > Columnists > House Talk
Is It Wise to Pay a Retainer Fee
To a Real-Estate Agent?

By June Fletcher
From The Wall Street Journal Online

Question: My fiancé and I are looking to find a real-estate agent and buy a house. We met an agent with 28 years of real-estate experience in our area who gave us a lot of paperwork to look over. However, he said that in order for us to retain his "team," which includes his daughter, for one year, we need to pay him a non-refundable fee of $395. My fiancé and I are a little leery. Does charging a fee sound right to you? Also, we are okay about working with him, but are not comfortable with having to work with his daughter as well. He made it sound like we would be working more with his daughter than with him.

-- Annette

Annette: When my husband and I went shopping for our first home in the mid-'80s, there were two types of real-estate agents: Those who listed homes, and ones who took buyers around to look at them. Both were necessary, and because the Internet and online real-estate listings didn't exist, the agents who showed homes to buyers generally spent a lot of money on gas and earned every penny of their commission.

But there was a problem with this situation. Although most buyers thought of the agent who took them around as "their" agent, in reality, both that agent and the listing agent were paid by, and had a fiduciary duty to, just the seller. So both were obliged to tell the seller everything the buyers said about their plans and negotiation strategy.

Naturally, this stacked the deck against the buyer, so agencies now typically spell out contractually what sort of relationship they have with the buyer -- a good reason to read all paperwork you're given very closely. Plus, a new kind of agent emerged over the years, the "exclusive buyer agent," who is responsible to the buyer alone and doesn't list homes. I highly recommend that buyers seek out such agents, as they'll not only keep your confidence, they'll also drive you around, give you valuable insight into market conditions and negotiate hard on your behalf -- without any possibility of a conflict of interest. A good place to find referrals to such agents is the National Association of Exclusive Buyer Agents.

But like everyone else, buyer agents don't work for free. At first glance, it seems like the seller pays them, since most are paid at closing from the commission costs that the seller pays, just as in the past. In reality, buyers pay for everything, since sellers routinely factor these costs into the asking price for the home. The typical real-estate commission ranges between 5% and 6%, split between the buyer and seller agents. Since the median price of an existing home is currently $208,400, that means a buyer is effectively paying between $5,210 and $6,252 for representation in a typical transaction.

But not every agent works this way, and flat fees are an acceptable form of compensation -- in fact, they're sometimes a bargain, if you compare $395 with the figures above. Be sure you understand and agree with what you will be getting for your money, though. Will the team be finding for-sale-by-owner and distressed properties for you, as well as those listed on the multiple listing service? How often will listings be sent to you, and in what form? Will somebody be available to show you properties that interest you, at your convenience?  How much help and advice will you get to secure financing? Who will do the negotiating when you present an offer, and who will shepherd you through closing? Is there a provision in the contract that says that the flat fee is all that will be paid to the agent on closing, and that he will forego any commission? What happens if you are dissatisfied with his service -- can you cancel the contract before the year is up and hire someone else?

If the agent you're considering has a lot of experience, it's quite likely that he's farmed out the more routine aspects of the job to other members of his team, while he concentrates on finding new clients and negotiating. That's a normal and efficient way to operate, and if he does a big volume of business, could explain why he can offer relatively low flat rates. My suggestion: Share your concerns with him and see how he reacts. If you remain uncomfortable, walk away. There are legions of other agents out there who would love to have your business.

-- June Fletcher is a staff reporter at The Wall Street Journal and the author of "House Poor" (Harper Collins, 2005). Email your questions about the residential real-estate market. Please include your name, city and state. If you don't want your name used in our column, please indicate that. Due to volume of mail received, we regret that we cannot answer every question