Would Buyers Pay Their Buyer Agent?

Real Estate Broker/Owner with Ryan Taylor Homes

In a recent post, I brought up the issue of who should pay the buyer's agent. Most of the comments I received focused on two concepts:

1. Many of you commented that buyers, if faced with the possibility of having to use part of their funds to pay their own agent, would simply move onto another house.

2. Sellers should offer a HIGHER commission to buyer's agents to attract more buyers.

Can anyone prove either one of these through their own experience?

Recently, and for the first time in my own experience, I saw a commission on the buyer's side of the HUD-1. In this case, the buyer wanted the house and didn't mind to pay their own agent. They didn't just move on to the next house.

As for offering higher commmissions and bonuses, I have tried these strategies on my listings. While I get a lot of interest from agents hoping to bring a buyer, never has this strategy actually resulted in a sale.

And, in case you were thinking that no agent would show your listing if you didn't offer a commission to the buyer's agent, try to remember the last time a buyer asked you which houses they should see? In my case, that would have been several years ago.

Buyers come into office looking for a walking lockbox key and an unlimited taxi service. That is, if they come into the office at all. Often, they just want to meet at the property. On their lunch break. I like to think buyers are also looking for a skilled contract writer and negotiator, but I'm not at all sure they've thought of that.

If anyone has read the results of the survey by the California Association of Realtors that came out last summer focusing on Internet buyers, you might draw the conclusion that the role of the buyer agent is diminishing. Yes, it's good news that today's buyer is better educated, but that also means they're not looking for that education from us. Yes, it's good news that they spend less time in our cars touring homes, but that also means they got into the car already knowing what houses they wanted to see. They didn't ask us.

Comments (6)

Pam Graham
All Real Estate Options - Jacksonville, FL
Jacksonville, Clay & St Johns Counties

I have never had a situation that the buyer had to pay my commission, so I can't give an opinion on that topic based on experience. I have seen listing agents offer higher commission or a selling bonus but I don't think they are effective. I think it's better to offer a buyer an incentive than the agent. I would not push a house on a buyer just because of a higher commission.

I think buyers are becoming more educated due to the internet, however I think that makes our role even more important. We can go online to look up information on virtually anything and get an answer to a question, but is it the correct answer?

I think it's our job to sit down with the buyer before we show them houses and explain what our job is, how we get paid, what the buying process is, explain our skills regarding writing contracts and negotiating, then they will see our true worth. Of course there are some who will still think they can do it on their own, but the consultation will hopefully weed them out so we don't waste any time with them.

I hope you had a Merry Christmas!

Dec 27, 2007 04:00 AM
Carrie Heath
REMAX Affiliates - Chippewa Falls, WI

AS a rule, I help the buyer write my commission into the offer contract.  I do NOT look at compensation when giving listings to my buyers, and I have never had a problem getting the compensation I request (keeping in reasonable, of course).

Keep your buyers by reminding them what you get paid for - a local attorney got terribly burned on his purchase that he handled himself - and he works with contracts all day, every day!  More savvy buyers don't mean professional buyers.

Jan 01, 2008 06:12 AM
Kathi Frank
Kate Writes Right - Houston Heights, TX
The Woodlands TX

Kathy, I know agency laws vary from state to state...therefore, the clarity of buyer agency compensation has variance too.  However, asking a buyer to pay compensation directly is unneccessary and usually detrimental to the transaction.

Let's face it, the commission of both agents is ALWAYS paid by the buyer.  The location of the commission on the buyer or seller side of the HUD-1 does not determine where the funds come from.  Typically, the buyer (in my market at least) gets a mortgage.  Most of the time, the buyer wants to maximize their leverage at the time of purchase...particularly with our recent interest rates.  So, what is the advantage of taking this priviledge away from the buyer by expecting the buyer agent commission to be moved from the seller to the buyer's side of the HUD?

What is important is to make your client, whether buyer or seller, understand who represents who.  Once your client is clear on agency obligations, it is imperative that we work to the benefit of that client with all the skill and knowledge that we can bring to the table.  In my experience, my internet-enabled clients are more likely to see my skill worth compensation. 

In commercial transactions, it is a very different story.  Those clients are often leveraging the purchase in a totally different fashion.  Also, the research and representation of a commercial buyer is quite different.  The experience of buyers paying directly for buyer agency is much more common in this aspect of the business.

Jan 01, 2008 11:10 PM
Steven Dean
Compass Real Estate | 202.545.6900 - Washington, DC
We have had over half of the buyer clients we've worked with gladly offer to add our fee to the sales price when the seller was not compensating the buyer's agent. People will pay for service if they see the value in it. If you can show the buyer that you can save them money and reduce their risk, they will pay for it most of the time.
Jan 18, 2008 11:10 PM
Latonia Parks
Top Bragg Realty, Fayetteville NC, Home of the 82d ABN DIV - Fayetteville, NC
Certified Military Relocation Expert
You guys have made alot of valid and valuable points.  I have yet to see the buyer paying C/C though.
Jan 19, 2008 11:26 PM
Denise Allen
Resh Realty Group - Chesapeake, VA
Realtor@ Chesapeake, Hampton Roads
For a while here when the market was hot there were listing in the MLS for $1.00 commission and they were selling.  I never had the pleasure of dealing with one of those so I don't know how the commission was handled.
Jan 23, 2008 08:09 AM