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Who Really Pays the Commission?
Every time I talk with a customer about Buyer Agency, they always ask "Am I going to have to pay the commission?" My short answer is, you already will be.
Who brings the money to the transaction when a house is purchased? The buyer does. Unbeknownst to the buyer, the seller has entered into a listing contract stating how much commission he is willing to pay for the sale of the home. For our example, let's say 6%. In that listing contract, the seller and listing agent agree to offer compensation to a cooperating agent (a buyer's agent). Again, for our example, let's say it's 3% being offered to the cooperating agent. So the buyer, without being consulted, has agreed to pay a 6% commission...because it is included in the purchase price.
Is the buyer paying any more for representation in this scenario? Probably not. But let's cover some other scenarios.
A buyer enters into a buyer representation agreement with an agent and agrees to pay 3%. The buyer decides to purchase a property where the cooperating agent is being offered 2 ½%. What happens to the other ½%? There are several answers to that. The buyer can ask the seller to ... more
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