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How does a Buyer's Agent get paid? By the home buyer?

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March 23 2011 - Parkton
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Answers (21)

Profile picture for user3958630
@SteadyState - good point.  It's always important to have every agreement in writing and disclosed.  You emphasize the important fact that as the home buyer, your agent is not truly working for you under the traditional way of doing things.  
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April 18
Profile picture for SteadyState
(I know the math is off - but the point I make does not rely on the correctness of the math)
user3958630 says:
"Home is listed for $300,000
Seller's agent gets $15,000 (5%)
Buyer's agent gets $1,500 of that (10%, or 1% of the total)
As the buyer, tell your agent to negotiate the selling price down to $290,000 and you'll pay him/her $2000.  You just saved yourself $8k and made your realtor an extra 500 bucks"

Be very careful and check with an attorney before proceeding on the above suggestion. Consider the following:
1. The Selling (buyer's) agent has a contract with the Listing agent and that contract spells out exactly how the selling (buyer's) agent gets paid. (So your so called selling (buyer's) agent actually works for the seller and not you the buyer!)
2. In many states it is illegal to offer money to a listing agent  or a selling (buyer's) agent without disclosing that information to the seller.


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April 17
Profile picture for user3958630
Sorry, math correction on my previous post - $1,500 would be 0.5% of the total.
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April 17
Profile picture for user3958630
Why not tell your agent (as the buyer), "Negotiate a better price for me, and I'll write you a check myself,"?  This puts the agent's motivation on your side to reduce the price in negotiations. Prime example:
Home is listed for $300,000
Seller's agent gets $15,000 (5%)
Buyer's agent gets $1,500 of that (10%, or 1% of the total)
As the buyer, tell your agent to negotiate the selling price down to $290,000 and you'll pay him/her $2000.  You just saved yourself $8k and made your realtor an extra 500 bucks.
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April 17
A Buyer's Agent has a written agreement with the buyer that spells out the terms of how the agent will get paid. You need to read and understand your agreement to determine how your agent will be paid. I agree, "standard" is not a good choice of words in this case. Maryland does publish standard forms for agents, but what goes in the blanks is where things change!
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April 23 2011
I really hate to see any Realtor say that something is "standard" in Real Estate.  Nothing is standard and everything is negotiable! 

When a listing agent gets a listing he/she negotiates a percentage of the sales price with the seller to get paid.  The listing agent then uses a portion of that percentage to pay a buyers agent for bringing a buyer.  There are some RARE exceptions to the rule but a buyer's agent should always be paid through the listing agent.

A lot of buyers seem to think that they can save money if they don't use a buyer's agent but that simply isn't true.  As I stated before, the listing agent has already negotiated with the seller what he/she will be paid.  If a consumer comes in without a buyer's agent then the listing agent simply makes more money and there's not an industry professional looking out for the best interest of the buyer... remember, the listing agent only has the best interest of his/her clients in mind... NOT the buyer's!!

When I'm asked "Do I need a buyer's agent?", this is what I say:
Can you purchase a home all by yourself? Of course you can!! However, using a licensed Realtor as a buyer's agent doesn't cost you any money. Wouldn't you rather have a knowledgeable professional in your corner that…

1. knows the market better than anyone
2. is a skilled negotiator that can help you get your next home at your price and close that purchase on your time
3. has access to ALL homes on the market and some that haven't even hit the market yet
4. a Realtor has access to every home on the market and can arrange to let you in on your time.

When a Realtor (Listing Agent) gets a listing from a seller he/she works out a percentage of the sales price for his/her commission. He/She then splits that percentage with the buyer's agent that brings them a buyer. You don't save any money by not using a Buyer's Agent… that just allows the agent that represents the home seller and the home seller's best interest to get paid on the full percentage amount. And without a licensed Realtor looking out for your best interest, you leave yourself open to possibly purchase a home with unknown defects, etc… Having a buyer's agent only helps you.

Why do all the work yourself when you have a free service available to you? Work smarter not harder!!

 
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April 05 2011
the buyers agent is paid by the seller in the cost of the listing. This is very standard.
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April 02 2011
I find It really kind of amazing that there are people who actually think realtors should work for next to nothing. Most people who state such nonsense have no idea the costs involved in being a realtor. I realtor is an independent business person and while they are associated with a brokerage they are still responsible for the vast majority of their cost.

people use realtors because they are the ones who connect the two parties and buying a home without realtor representation is like climb a mountain with a rope. 
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April 01 2011
While I have taken exception to the idea of a buyer's agent being "free" many times, the affect the commission has on sellers and buyers is very different.

Sellers set a price knowing they will have to deduct commission costs from the check at closing.
Buyers offer a price based on what they feel is fair market value, with no consideration, whatsoever for commission costs.

Yes, I do believe that home prices are probably inflated due to realtor costs for this reason but at this point it is a really difficult to separate out what houses would sell for with or without agents because the few houses that manage to sell with no agent involvement are almost always in line with sold prices of listed houses.
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March 23 2011

From my experience as an agent in Las Vegas, Buyers agent are paid by the Seller.

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March 23 2011
A buyer's agent can be paid by the buyer, the seller, or both.
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March 23 2011
Profile picture for SteadyState
REAs dance on the head of a pin on this one because they want to continue the illusion that the seller pays - which is technically true because of the payout process but is a massive distortion of reality.

Let's say you sell your home for $1M. The listing and buyers agent fees come from this $1M - say 6%. Thus the seller receives $1M - $60K = $940K.

If there were no agents involved, the seller could sell for $940K without loosing a penny with the sale including agents.

But the buyer paid $1M - so who paid the $60K? Only the buyer brings a check to the table!
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March 23 2011
Typically the seller pays the buyers agent from their profit from selling their hhome. A buyers agent can have an agreement with the buyers for additional fees but that is not the norm, at least here in Charlotte NC.
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March 23 2011
Profile picture for klarek the realist
Buyer pays for seller's house.  Seller's proceed pays for buyer's agent.  The money comes from the buyer, but is more or less left at the discretion of the seller to disperse.  So not only is it NOT true that the buyer doesn't pay, there's also a massive conflict of interest in this system.
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March 23 2011
Profile picture for Dunes....
THIS IS EXACTLY WHY NO CONSUMER SHOULD SIGN A BUYERS AGREEMENT
100% FREE to the Buyer...The Seller pays for the Buyers Agent...So your Agent is FREE.... doesn't cost a dime..FREE

Don't limit yourself to one Agent...Use 10-20-100 FREE AGENTS

 Get as many FREE Agents as you can working for You.......FREE FREE FREE FREE FREE FREE Get 10 Agents representing you and looking for homes FREE FREE FREE FREE FREE THE SELLER PAYS


FREE Agents...Have 100 FREE Agents work for you...FREE

Stupid Sellers!


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March 23 2011
it's built into the purchase price but comes out of the seller's proceed.

You can look at it however you wish, that the seller is paying it by writing the check or that the buyer is paying it by paying the purchase price.

In Maryland, many agents then suppliment the commission by charging the buyer additional commission and calling it an admin fee, storage fee, transaction fee, etc.
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March 23 2011
In Pennsylvania the sellers usually pay the commission to the buyer's agent as displayed on the muliple listing sheet, unless its a For sale by owner sale. Then depending on the buyer's agency contract you have with your agent you may have to pay them a fee.This should be discussed between you and the agent you choose before you purchase a home.

Dean Markman
RE/MAX Properties
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March 23 2011
Commission....normally the seller pays via the agreement the listing agent makes with the seller. The buyer at times with FISBO and special cases can be paid by the buyer as agreed to in the Buyers relationship! In my case as an agent this has never happened to me. 
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March 23 2011
In most cases, depending on area, the agent gets paid from the SELLER.  Of course, agreements between Agent and Buyer can be written to dictate whatever the two agree upon prior to signing the contract.  Be sure to ask BEFORE you sign....always stay informed!
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March 23 2011
It depends on the situation. Often, the seller pays both the listing and the buyer's agent, per their listing agreement, and what the MLS states. If not, then the buyer pays. It is stated in the Exclusive Right to Represent Buyer Agreement how it is handled, and then the listing of the house in the MLS can help determine if the seller is paying.
I hope that helps!
Thank you!
Sincerely,
Marney Kirk
Keller Williams Excellence Realty
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March 23 2011
I am a buyers agent, we get paid most of the time by the Seller. Occasionally the buyer pays us in special circumstances but in all my years, I have not had that happen to me.
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March 23 2011
 
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