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Who paya to the agent:buyer or seller? how much?

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January 23 2011 - Tampa
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Answers (34)

The seller generally pays the commission.  A buyer should have their own representation.
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February 10 2011
The commission is added in on the sale price so the seller pays with the buyers money. So what comes first the chicken or the egg. Just remember in real estate Everything is Negotiable...!
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February 10 2011
Each office works differently and charge a fee that is peticular within their brokerage.  Typically the seller ends up paying commisions that are negotiatable.  Yes, be concerned about how much, but I will advise you to ask what services you will recieve, and pick an agent that you like.

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February 10 2011
LOL!! Michael, that's good. I may just have to use your tactic one day. Love it. I generally just give my Buyer a $100.00 gift certificate to Home Depot or Lowes.
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February 10 2011
Profile picture for Dunes....
LOL Michael...

Have you tried offering one of these? Helpful Negotiating Item

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February 10 2011
I offer my services at NO cost to my buyers.

AND!

They get a $50.00 gift card to Chuck  E. Cheese!

AND!!

They get a complimentary roll of quarters!!!

How do I do it? Volume!
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February 10 2011
Profile picture for Dunes....
I think the Amount of Sales and the Number of RE Agents competing for the Low amount of Sales has created a situation where Excellent RE Agents/Realtors are offering Reduced Commissions, Rebates, Flat-Fees ect. in order to get Business.....
I believe the Consumer has some Excellent Options to Consider and I believe they should consider them so "They Get What They Pay For"

I don't think an Agent is Better because they cost more....
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February 10 2011
I'm in Florida. We have duties and responsibilities to the Seller and Buyer BUT we are automatically considered Transaction Agents unless otherwise stipulated. That means that our role is limited.. I am honest and I try to educate them but it's not my duty to do so. A transaction agent works for the transaction, not for the Seller and not for the Buyer but we CAN assist them.

Part of the issue here is that people don't understand the difference in what our roles are. I'm not arguing with you but you're making comments that appear ignorant to me. There are different types of agents. I have never denied my role. I work in the field because I enjoy it and like helping people list or buy their home BUT I also do it to get paid.. end of story. It's not necessarily an agent's job to look out for their client because we don't have clients, we have prospects who are buyers and sellers, who we  assist with the transaction but to a limited degree. Anyone going in for any sort of procedure with a doctor or buying anything should "educate themselves and beware."

I have been a Seller and a Buyer long before I ever became a Realtor so I understand that perspective and have educated myself. I have paid a 7 & even an 8% commission as well and felt it was well worth it because of the job my agent did, and yet, I didn't realize how difficult the job was until I started doing it myself.

FSBOs are not blacklisted.. I have shown FSBO homes and there are agentless Buyers looking for FSBO because they think they're going to get a better deal.  They have the right not to use an agent. No one is forcing them either ways. I have more so, turned down showing homes that are Short sales or even Occupied rather than FSBO's. If a FSBO is willing to pay a 3% commission, then I will show it. If they don't want to but my Buyer is interested, I may not have a choice but to show it. Again, I work to get paid.
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February 10 2011
Profile picture for klarek the realist
"How does the buyer or seller get fleeced when it's on the contract and the Seller knows he/she is going to pay that from start up?? "

Contract written by the broker/agent, where the market is under monopolistic control of realtors.  It's a fleecing.  Nobody should have to pay $24k to sell their house.  That is outrageous.

"They can do a FSBO and not pay it at all but they want Realtors to provide a service and they are expected to pay for that service."

That is b.s.  FSBO's are constantly shunned/blacklisted by realtors.  It's not impossible, but the system is entirely gamed against anybody that wants to avoid being fleeced.  And it's not about "wanting the services", it's about ignorance or capitulation to a cartel and their "you need us" barrage of dishonest propaganda.

"The % is divided by atleast 4 entities, which means the realtor is really not getting as much as one thinks, especially when one considers the overhead involved in advertising, etc. "

You missed my point that it's irrelevant how many vultures get to pick at the carcass.  The pain from the consumer is 100%.  It's about what a person is getting for what they pay, not about what an agent and his or her slimebag broker get to milk them for.  I mentioned this below, and you ignored it.  Why are realtors utterly incapable of looking at it from a customer's perspective?  Probably because there's never any incentive to, since the system is gamed to reward agents that look out for themselves.

"If they don't want the service, they can do it themselves and it's as simple as that"

Increasingly people are, which is why some day agents will be as demanded as travel agents are today.  Of course it will be extremely difficult to move forward so long as agents make these efforts fruitless (don't show FSBO houses to their clients) and NAR's exclusive control of the industry goes unchallenged (though, at some point, I'm confident they will be found in violation of the Sherman Antitrust Act).

"I'm sure whatever profession you're in, you wouldn't work for free."

I make what the market equilibrium establishes for my compensation.  Not a multi billion dollar lobbying giant - slash - propaganda unit.  But yes, I've heard this before, and it's usually right before an agent compares their services to those of lawyers (who DO work pro bono) or doctors, professions that require several years of post-graduate education.  Agents are the ones that push for commission over hourly rates, because that's the best way to make $12k for ten hours of work.  Nobody will pay you $1200/hour for what you do.

"The parties generally know what they are getting into."

Not really, and in cases where they do, they know that the cartel has gamed the system against them and they capitulate to such force out of desperation.   People with families and jobs in transition are essentially blackmailed by your ilk to use your "services" for an exorbitant amount of money.

"they are not all ignorant and if they are, then it's their job to properly educate themselves before entering into a legal contract"

Funny, I thought it was the agent's job to look out for their client.  Now you're admitting it is "buyer beware".  But you are right, it is the client's responsibility to be educated and not let agents take advantage of them.  One thing my RE license instructor made very clear was that clients need to be kept in the dark, it's what gives scumbag agents leverage over them.
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February 10 2011
I meant that it's few and far between that this scenario to renegotiate comes up. Most Sellers understand that it's already a negotiated item and don't bother to request it. I'm sure that depending on the "situation" many Realtors may reconsider but when there's a contract, it truly is their decision.  The worst that may happen if they don't let someone out of the contract is that they don't sell the property or get business from that Seller (referals) again but in some cases, that may or may not be a bad thing. I know certain Realtors that wont work with certain past clients. There are some that do have the luxury of picking and choosing so it can be a two-way street.  I've gotten thrown referrals from those type of agents and, sometimes, forwarded them on myself.
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February 10 2011
Profile picture for Dunes....
"Can it be negotiated after the fact?  Absolutely but those are few and far between that are."

I believe that is your opinion 
The Large amount of comments by other Agents suggesting or stating that in the type of scenario you provided they would gladly negotiate after the Fact makes me wonder if "those are few and far between" is really accurate anymore if it ever was....
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February 10 2011
Klarek, How does the buyer or seller get fleeced when it's on the contract and the Seller knows he/she is going to pay that from start up?? lol. They can do a FSBO and not pay it at all but they want Realtors to provide a service and they are expected to pay for that service. The % is divided by atleast 4 entities, which means the realtor is really not getting as much as one thinks, especially when one considers the overhead involved in advertising, etc.

If they don't want the service, they can do it themselves and it's as simple as that. I'm sure whatever profession you're in, you wouldn't work for free.

The parties generally know what they are getting into.. they are not all ignorant and if they are, then it's their job to properly educate themselves before entering into a legal contract.
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February 10 2011
Profile picture for klarek the realist
"we see between 6-7%.  Now this percent is divided between both agents and their broker, and sometimes frnachise fees, errors and ommissions and signage. It may be sound like a large % but it gets cut by many people."

It is a lot, and it's paid by one person.  It doesn't matter how many times you divide the recipients, the pain felt by the person paying it is substantial considering it's just a transfer of property.  This is what happens when an unscrupulous cartel controls a monopoly... the buyers and sellers get fleeced.
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February 10 2011

I may have misunderstood your original comment, however, the commission is negotiated at listing. By the time a Buyer comes along, that part has already been decided. Can it be negotiated after the fact?  Absolutely but those are few and far between that are. Further, most brokerage firms already have a set bottom line commission and wont take less than that due to overhead expenses such as advertising. This limits the Agent's ability to actually drop the commission unless they're willing to work practically for nothing. In today's market, most agents are already working with that bottom percentage anyhow.  

Is another agent willing to drop it, maybe but how effective is that agent going to be? Money talks.  Further, There's already a contract set forth by the time a Buyer comes along. So the Seller is already bound by the contract,  which means that the agent is the only one with the choice unless the Seller wants to wait til the contract expires and possibly miss out on a Buyer, just for the sake of a commission reduction, if the Agent refuses to drop it down. So, you see, it's not as easy as "another agent will."

Either ways you see it, it's still an item that is paid out of the Seller's proceeds.

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February 10 2011
Profile picture for Dunes....
"Dunes, so if there's a Listing Agent and you purchase a property (agentless), do you think they are going to drop the commission already stipulated on the Listing contract because there's no independent Seller's Agent?"

Why would I think that and what does it have to do with anything I posted?..

I think it could be negotiated and that in your scenario negotiating & Reducing the Commission has been done before but I most certainly wouldn't assume anything.....
 
If YOU don't negotiate your Commission or won't consider reducing/negotiating the Listing Commission that's fine but there are most Certainly Excellent Agents who will
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February 10 2011
It's not Free for a Buyer and a pretty good argument can be made that as a Buyer you are Paying for BOTH AGENTS.......

Dunes, so if there's a Listing Agent and you purchase a property (agentless), do you think they are going to drop the commission already stipulated on the Listing contract because there's no independent Seller's Agent? 

The reality is that the commission is already decided between the Seller & Listing Agent when the listing contract is drawn up, so regardless whether the Seller has an agent or not, it's still going to be the same commission, only the Listing Agent gets to double dip.

True that the commission comes out of the proceeds of the sale but regardless of number of agents involved, that stated percentage is still going to be charged whether the offer is accepted at $300k or $250k, etc. Seller just gets less.

The only way to avoid commission is FSBO & on many occasions, Seller ends up settling for less than if they had an agent, unless they know what they're doing.  Then there's the extra duties they have to take on. It's not impossible but definitely harder in today's market.
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February 10 2011
The amount of commission paid is negotiable.  It is customary sellers pay the commission from the proceeds of the sale.  This, too, is not always the case depending on the agreement between agent and clients. For example In selling extremely low-priced foreclosures and short sales the commission is usually so low, a buyer can contribute to the commission in order to compensate the agent for his time and effort.
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February 10 2011
Profile picture for Dunes....
The Seller pays the Commission from the Money they get when you Buy the Property.....

Step away the Smoke and Mirrors

It's not Free for a Buyer and a pretty good argument can be made that as a Buyer you are Paying for BOTH AGENTS.......
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February 10 2011
The seller usually pays the commissions to the agents.  It does not cost you anything as the buyer to use an agent unless that firm charges extra fees.  We do not charge buyer broker fees.
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February 10 2011
Normally, Seller pays a set commission.. usually a percentage. From that percentage, both agents (Listing & Selling) AND both brokerage firms are paid (Listing & Selling). So a 6% commission (for example) is split 50/50, then the brokerage firm of listing agent pays that agent his/her commission and Selling Agents brokerage firm pays Selling agent his/her portion of the commission. So if the brokerage firm has a contract with their agent that they'll pay 50%, then on a 6% scale, that agent makes 1.5% commission & brokerage firm gets the other 1.5% commission of the 3% split. A $100k property becomes a $1,500.00 compensation for that agent..  That's basically the way it works., which is why we say Agent services are free for the Buyer.

There are other fees, however, that Buyer and Seller pay.
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February 09 2011
Most of the time there two agents involved, seller's agent and buyer's agent, the commission is divided as per agreement between brokers, who than pay the agents.( California) .Commission is negotiable, and should be spelled out in the listing agreement, and in the sales/purchase agreement.it should always be in writing. Buyer or Seller should always know who pays for what....... 
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February 08 2011
Agent commissions are agreed upon between agents and their clients (Buyer or Seller)  and are documented in  contracts:

1.  The listing agreement between Seller and Listing Broker spells out how much commission will be paid by the Seller.  The listing agreement may also spell out how much of that commission will be paid by the Broker to a Cooperating Broker.

2.  The MLS listing is also a contractual offer by the LIsting Broker to pay a a Cooperating Broker a specified amount (or not to pay an amount). 

3.  A Buyer Agency agreement between Buyer and Buyer Agent spells out how the Buyer Agent will be paid in various situations. There may be cases where the agent accepts the amount offerred by the MLS Listing Broker.  Or there may be cases where the property is not listed with a Broker, and the Buyer will be obligated to pay their agent.  This should all be spelled out in the agreement.

As a Buyer or Seller, you may feel free to ask your agent anything you would like to know about this topic.  Hope this helps.
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February 04 2011
Hi Colleagues!  I think that when answering this question, unless you are very careful, you could commit a serious anti-trust violation.  Some of you already have. Check these out:



You Said What? AN Antitrust Brochure
www.realtor.org/letterlw.nsf/23e5e39594c064ee852564ae004fa010/1f0aa539e9383ac086256de4005360b3/$FILE/BROCHURE.PDF

Antitrust and the Real Estate Brokerage Firm
www.realtor.org/LetterLw.nsf/pages/0802antitrust?OpenDocument

NAR MLS Policy also provides:

A Multiple Listing Service shall not: "Fix, control, recommend, suggest, or maintain any percentage division of commissions or fees between cooperating Members or Non-members.

 

Further, the REALTOR® Code of Ethics, Article 15 provides:

REALTORS® shall not knowingly or recklessly make false or misleading statements about competitors, their businesses, or their business practices.

This is not theoretical.  An entire AZ Association of Realtors was brought to its financial knees by the Feds (back in the 80s?) because its members had discussed commission pricing.



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January 29 2011
It is typically the Seller, the seller and listing agent negotiate terms of total  commission, then the listing agent determines the amount to offer out to other realtors to bring a buyer.  some realtors also charge a small fee to buyers - it seems to be a regional thing.  commission is always negotiated there can be NO "standard" or fixed amount in any area.
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January 28 2011
I've always been paid by the Seller although if its a FSBO, the comission may be split or the Seller may request that the Buyer pay.
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January 28 2011
I agree with SteadyState. I depends how you look at it. The buyer usually doesn't need to pay any money upfront, but neither does the seller. Both agents are paid at closing out of the closing price. So technically both are paying, but it's like eating out, you pay after the service is rendered, but it  is a prenegotiated price with the seller. But, usually, if you are a buyer and you don't buy, you don't pay. If you are a seller, you will eventually pay when the home sells. So it's only a free service for the buyer, if they don't buy.
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January 25 2011
depends on situation.
Seller will normally pay commission. 
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January 25 2011
Profile picture for SteadyState
Few agents understand what is going on here (or they understand but it benefits them to misrepresent the situation):

- The buyer pays the seller the purchase price
- The seller pays the agents from the purchase price

Physically the seller writes a check to the agents but the agents commission is included in the purchase price.
SO THE BUYER PAYS THE AGENTS IN REAL DOLLARS
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January 24 2011
The seller pays with the buyer's money.  So who really pays?
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January 24 2011
The Seller Pays the commission! This is the biggest reason Buyers should always be represented by a professional Realtor. Why do it alone if you can be represented with no out of pocket expense!
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January 23 2011
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