What does it cost me to have you as my Buyer's Agent?

By
Real Estate Agent with Realty Station

You'd be amazed at how many people never ask....

Actually, it's a great system for Buyers.  When a Seller lists his property with an agent, he agrees to pay the rea27100 Burkes Lane, Kingston, WA, Kitsap homes for salel estate agent a certain percentage of the sales price.  The Seller's agent then puts the property in an enormous database, which is called the Northwest Multiple Listing Service in Kitsap County real estate lingo.  The listed home is then available for other real estate agents to access and show to potential buyers.

If another agent brings in a client to purchase the property, the Seller's agent splits his commission with the Buyer's agent.  (In this case, if you purchase property using me, I would be your Buyer's agent.)

For example, Mary puts her Silverdale home for sale with real estate agent Bob.  You contact me and want to see properties for sale in Central Kitsap County that match the description of Mary's house in Silverdale.  I check the database and find Mary's house listed there, by Agent Bob.  We go look at the house, and you decide it is a great house and fits your needs well.

We write an offer, and it is accepted.  You are buying a house!  When we close on the house, Agent Bob gets a check from the proceeds of the sale of Mary's house.  He then turns around and sends half of his check to my company.7018 and 7020 Crestwood Court, Port Orchard, WA, Kitsap Duplex, Investment Homes for sale

There are exceptions to this rule.  For example, if you decide to purchase a home that was not listed with a real estate agent, we would have to work out some sort of payment structure. 

Some people believe that they will save money if they don't use a Buyer's agent.  Studies have shown that this usually ends up costing them more money, for two reasons: 

  • First, the seller is going to pay his agent the agreed-upon commission, no matter what, whether he has to split it with another agent or not. 
  • Also, because the seller has someone to protect him and look out for his best interests, and the buyer does not, the buyer often ends up either paying more for the property right away, or finding out later on that he could have done or paid for certain things during the home's sale that would have saved him money years later, such as a homeowner's warranty or a private home inspection.

If you are considering buying a home or land in Kitsap County, I strongly advise you to get a Buyer's agent to work exclusively for you!  It won't cost you extra in most cases, and will probably prevent you from losing money.

Comments (44)

Stephen Graham
Inactive - Atlanta, GA

"or finding out later on that he could have done or paid for certain things during the home's sale that would have saved him money years later, such as a homeowner's warranty or a private home inspection."

 

That is a very true statement. It takes experience to really know all the ins and outs of a real estate transaction; and, most transactions are never the same.

Feb 16, 2009 07:53 AM
Kathy Sperl-Bell
Active Adults Realty - Lewes, DE

Because Real Estate is governed by State Law, it isn't just Buyer Agency that is different from state to state. Even more reason that Buyers should be working with a Buyer's Agent when they are looking to move to a new area. I explain the commission as being paid out of the transaction; the Seller negotiates the total commission to be paid when they sign the Listing Agreement because they are "offering the property for sale". Not only do buyers not get a better deal when they go directly to the Listing Agent or to the new home community sales office, they often pay more. Buyers need to ask themselves who works for whom!

We all need to remember to refer our clients to a Buyer's Agent when we know they are looking to relocate.

Feb 16, 2009 08:56 AM
Anonymous
SenseMakeDollars

The wisest decission a buyer can make when considering a real estate purchase is to hire an experienced and reputable REAL ESTATE attorney. For most people, buying a home will be the largest investment of their lifetime. Why would one even consider such an endeavor without solid legal representation?

Feb 16, 2009 09:21 AM
#27
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Sensemakedollars,  I STRONGLY DISAGREE  with your statement!  In Washington state, attorneys are rarely involved in a real estate transaction.  It is handled by real estate agents, lenders, title officers and escrow officers, among others. 

However, I do know that in some states, the real estate agents find the home, negotiate the details of the transaction, then turn the entire transaction over to real estate attorneys, who then draw up details of the transaction in a legal contract.  Since I do not know which state you are from, I'm not sure if your statement applies to your state, but it certainly does not apply to ours.  As real estate agents, in Washington we are permitted to practice a VERY LIMITED and very regulated aspect of law - the real estate transaction and the contracts that apply to those transactions.

When there is a question of title or legality that is outside the realm of my expertise, then I will recommend that the client see a real estate attorney.  I have done so a few times in my career, and will always do so when it is warranted, but the vast majority of real estate transactions go according to plan, at least as far as the legal contracts are concerned.

I would love to know which state you are from, because I suspect that your statement is very true for the state in which you practice.

Feb 16, 2009 09:59 AM
Roger Johnson
Hickory Real Estate Group - Hickory, NC
Realtor - Hickory NC Real Estate

State laws do vary.  In NC, we can enter into a 'verbal' buyer's agency agreement that isn't binding, but in order to have full buyer agency, a home buyer MUST sign a BAA before writing the offer, otherwise, the agent represents the seller as a seller's subagent.

Feb 16, 2009 10:56 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

As a business owner, who sells homes as an Exclusive Buyer Agent, my office has a variety of ways in which I, an agent of the company, can be compensated.

I can charge, and have required, a retainer fee from my clients.  This various, and can be up to $5,000, and I impose this when we've entered into a contract to purchase and the buyers (my clients) have gotten cold feet and bailed.  If they want me to continue representing them, I will -- only if they retain my services, and the fee is established.

My office also charges 3% on FSBO listings, if there is no courtesy to broker offered by the seller, I'm not going to work a FSBO without a provision of compensation.

I am the selling agent -- I sold the home and represent the buyers. The listing agent is the listing agent, they listed the property, and represent the sellers.  At least this is the provisions in our RMLS.

I only work with buyers who sign a very clearly written buyer's exclusive agreement.  I then become their agent of record, their fiduciary.  They are my clients and not a customer.  NAR has two levels of service to agents and the public:  customer level (listing agents talk to the seller and provide a CMA, for example) and client level (listing agents actually list the property under an exclusive right to sell agreement.)

My level of service doesn't waiver from these two NAR levels.  On the customer level, I meet with potential buyers and provide them a free 1-hour consultation.  Not all customers will turn into a client, and I don't work with anyone who is not a "ready, willing and able" buyer.  The client level service begins when they sign the contract, and engage me as their broker of record.

No contract, then I don't / can't spend time with them.  It's like asking a tax preparer to prepare your taxes without supplying you with their W-2's.  Can't be done . . .

Commissions, payment/fee structures can NOT be (even remotely) preceived as "customary" -- it's called racketeering boys and girls, and I do not conspire to set the commissions to any such standard.  A listing office negotiates a percentage with the sellers.  I don't have anything to do with that.  They post a BAC (broker/buyer agent commission) in the multiples, and that's the fee-split I am entitled to if I sell the house.  However, I can have another fee set with my clients.  For example, I can ask 3% for my services, and if the BAC is 2.5% the buyers have agreed to pay me .5% of the overall sales price, because that's the fee my office charges.

How we get paid is NOT standard, industry standard, or general.  Sellers can negotiate with the listing agent/office for whatver they want to pay them.  There is no standard to a listing contract, and there is no standard to my fees.

And now, this will be my post of the day . . . since it's such a lengthy comment, might as well squeeze some posting points out of it.

Feb 16, 2009 11:00 AM
Anonymous
Antoinette Galindo

Great information

Feb 16, 2009 11:27 AM
#31
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

I liked and agreed with your buyer rep explaination.  As stated, each state is different, here in Texas, all Agents work for the seller until said agent and buyer have a written rep agreement,  one does not have to have a written buyers rep agreement with the buyer but then both agents  work for the seller. 

 It is one of the first pieces of information we explain the Information about Brokerage Services and in that I tell a buyer, you have a choice, I can represent you, or I can show you homes and represent the seller, as a subagent. (I do NOT do Dual agency) I have not had anyone go to contract without a buyers rep agreement.  They do want that representation and negotiation factors.

Feb 16, 2009 11:36 AM
Anonymous
SenseMakeDollars

Marlene,

Your response is quite typical of most Realtors when it comes to a Buyer retaining legal representation in their transaction. Each State has it's own laws, rules, and regulations when it comes to Real Estate. Why would Washington stand out as a State that diminishes the prudence of seeking legal council?

Feb 16, 2009 11:52 AM
#33
Simon Mills
Mills Realty - Toluca Lake, CA

Well written, but to be devils advocate isn't it really the buyer who is paying the commission?  I know that doesn't sound right, but where is the money to pay the commission coming from...the buyer.  Most sellers would be just as happy selling their home for 6% less and not having any agents involved, so the person really paying the agents IS the buyer by paying 6% more for the property.

Feb 16, 2009 12:05 PM
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Roger, Wow, what a difference!  In Washington, we no longer have subagency at all!

Carla,  I definitely think you should turn this comment into a blog post of your own, it's great information.  However, if I may make a suggestion?  Take the commission that you charge out of it, as well as out of these comments.  That or make sure you say that these commissions are an example, a "let's suppose".  That way you avoid any suggestion of price fixing.

Thank you, Antoinette, for the compliment!

Gail, Again, very different agency laws.  There is no subagency in this state.  We work for one or the other, or for both at the same time (dual agency) or for neither one and just do paperwork.  In Washington state, if it walks like a duck, talks like a duck and acts like a duck, it's a duck, paperwork or not. 

Feb 16, 2009 12:31 PM
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Sensemakedollars, let me ask you this - Why pay for something you don't need?  In Washington State, if the house is listed with a real estate agent, the seller (and indirectly the buyer) is paying the fee of the Buyer's Agent anyway.  Most Buyer's Agents are quite capable and are actually very good at what they do.  Buyer's Agents owe the Buyer-Client their confidentiality, their loyalty, etc., and it is the Buyer's Agents job to protect the Buyer and watch out for the Buyer's best interests.  Why add the cost of a lawyer if it is not necessary?  What is a  lawyer going to do that a Buyer's Agent won't do? 

Feb 16, 2009 12:36 PM
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Simon, Sellers probably would be happy to sell their homes without a real estate agent involved in order to save some money (suggest you remove the percentage from your comment), but they usually don't.  Why?  For several reasons, one of which is that in this type of market, many times they CAN'T sell their homes without an agent.  So if they do list it with an agent, then indirectly it is the Buyer that pays the commission.  The point is that that Buyer is going to pay it anyway, whether they have their own agent representing them or not.

Feb 16, 2009 12:53 PM
Kathy Sperl-Bell
Active Adults Realty - Lewes, DE

Wow, there are even more differences than I thought. Delaware is an attorney state which means all settlements are handled by a real estate attorney. The contracts we use however are standard state contracts. The agent completes the contract (agreement of sale) with the buyer and negotiates with the listing agent. If it is a standard situation, the lawyer is not involved until an agreement has been reached and there is an executed contract. They handle the title search and document prep and gather all other paperwork necessary to go to settlement.

In non-standard situations, it is always recommended that we use an attorney to draw up the agreement. We have very good relationships here with our real estate attorneys. I know that in other states, a title company handles the actual settlement. Are there states where the agents handle the settlement themselves?

As for agency, Delaware made a change last year from a common law of agency to a statutory law of agency. With that, they created a new Consumer Information Statement that we are to present to every customer at a first substantive meeting. It simply discloses the law and describes the different ways we can work with them. Although sub-agency still exists, almost no brokers will allow agents to work as sub-agents.

Feb 16, 2009 10:07 PM
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Kathy, yes, big difference!  Here, the title company only does the title search and gives title insurance.  An escrow company does the actual doc prep and closing process.  They are an unbiased third party who doesn't work for anyone and just does the paperwork.  No attorneys, usually.  But like you, if it is a complicated contract or unusual in some way, at that point we will recommend an attorney.

Feb 17, 2009 03:49 AM
Kathy Sperl-Bell
Active Adults Realty - Lewes, DE

No wonder our clients are confused! Let's consider someone who has lived in one home for 30 years and then relocates when they retire. They will face two totally different real estate environments at once! Even if we have a client that bought and sold several homes over the years due to transfers during their career, that does not mean that they understand agency in our market area. More communication and "transparency" via blogs like this one are good education for all of us.

Feb 17, 2009 03:55 AM
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Kathy, We are on the same page, buyer education is SO important!  I live in an area with a large military population, coming in from all over the US and from overseas.  All coming in with different preconceptions about how real estate is supposed to work.  Educate, educate, educate! 

Feb 17, 2009 08:03 AM
Paula Swayne
Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA
Realtor-Land Park, East Sac & Curtis Park -Dunniga

I have to ask Carla something...how many times have you lost a client due to your fee structure? Personally, if I had an agent give this list of demands, I would be moving on to the next Realtor who will give me the same service without the possibility of my subsidizing the commission.

Feb 17, 2009 04:06 PM
Anonymous
Stephanie

I need local help...I have a cute house in Bremerton, however I got married 3 months ago and laid off 2 months ago.  My husband and I live in his house and can no longer afford the house that I own.  I want to take advantage of a deed-in-lieu process through my mortgage company but I have to have a listing agreement.  This forum and many others discuss exclusive buyers agents, but is there any way to list a property without any expectation to sell?  I do not want to make ANY money off of this property, just get rid of it without significant costs to me.  I don't need an agent to advertise or anything, just provide me with a listing agreement.  Is that even possible?  Thank you!

Mar 06, 2009 03:23 AM
#43
Marlene Scheffer
Realty Station - Bremerton, WA
Realtor to Kitsap County, WA

Stephanie,

The reason that banks want to see a listing agrement is because they do not want the house back.  Their first choice is for you as the owner to sell it for them.  That's why they want to see a listing agreement; they need proof that you have made a good faith effort to sell the house and have not been successful before they will talk to owners about a deed in lieu or a short sale. 

My advice would be to list it for what you owe plus any costs associated with selling the property.  I can help you figure that out.  Have it listed for a few weeks, then go back to the bank and show them the listing agreement.  I would be happy to help you with that.  Give me a call and we'll work together to get you out of this situation and on to your happily married life!

Mar 06, 2009 06:10 AM