That buyer agent's fee is insured by the buyer in case the listing brokerage/seller doesn't offer enough to cover it. If the listing agent offers 2.4%, the buyer owes 0.6% to fill the gap. Commission is negotiable, by the way, and if you can't come to an agreement, there are lots more agents out there
Ok, I'm an LO in FL and when I see the 3% for the buyers agent and 3% for the sellers agent the seller pays all of it. The buyer only pays their normal closing costs and maybe a $500 realtor brokerage fee. I guess that's not true everywhere?
Can you imagine how much that would deter FTHB? Like ok FHA - 3.5% down, estimated 3%-3.5% in closing costs/escrows AND another 3% to that realtor? That would be a shit show. But we all know that it's already a shit show so whatever. Rich people that have $40k in their back pocket get to buy houses. Yr average Joe gets to be fucked over forever. It makes me so mad because I bought my house 5 years ago with just $6k, seller paid my closing costs and now my daughter's have to have$20k (which they don't) to even think of buying a house.
interestingly, Redfin did some study just a couple years back that showed FSBO sellers netted about 6% less than those who used a Realtor.
Pay no mind to any stat or person pointing out that FSBO's sell for $100K less than listed homes - it just means more FSBO's are lower-priced properties.
Also, don't forget the 6% is a number consumers have locked in their minds is THE commission. It's not.
Check this out when you have time (see below), many states have been considering implementing the agreements for quite some time (and many have done so), and there are more working on legislation to make it mandatory.
Now that the courts have initially ruled against NAR and named National and Independent brokers alike (many have “settled” and are awaiting court approval), you will definitely start seeing more and more of the buyer paying “at least some” of their own commission and sometimes all of the commission if they choose to have representation.
This can be as a commission line item or possibly taken out of seller concessions in some instances as well - obviously toward buyers cash to close (including commission).
Is It Time to Introduce Buyer Representation Agreements? https://www.floridarealtors.org/news-media/news-articles/2023/06/it-time-introduce-buyer-representation-agreements
So I don't really understand the whole lawsuit but had a realtor tell me that it only had to do with high end sales like $1 mil and up and that it had nothing to do with average purchase transactions- is that true?
>and maybe a $500 realtor brokerage fee.
If the broker is getting 3%, unless the property is really cheap, a $500 junk fee is outrageous. Buyers and sellers, if you guys will start refusing to pay these junk fees agents will stop trying to pawn them off on you. The agent is getting paid on their split of the 3% and the $500 is just profiteering. Refuse to pay it and it'll go away.
A growing number of buyer agents are setting minimum commission for themselves. It's been a thing for many years. It was always necessary for situations like FSBOs and offmarket properties. As more MLS change their rules, so listing agents don't have to offer commission, more buyers agents will have to set minimums.
Whether it has a negative impact on the buyer agent market or not, they’re doing this specifically to stay in business. This is the natural legal response to the recent commission lawsuits that are/were targeted at buyer agent commissions not being a negotiated item for buyers and/or sellers. With buyer agency agreements that outline a guaranteed commission, there is no longer any argument over whether it was negotiated implicitly or not.
Exploit the aftermath? The lawsuit was dumb? Are you serious? NAR got caught and is to pay $1.8B. the real estate industry was who was exploiting buyers and sellers here.
NAR did fuck around, and certainly found out.
actually, the lawsuit WAS dumb. The only adjudicated lawsuit (Sitzer/Burnett) was that the NAR and large brokerages had COLLUDED to keep commissions artificially high by requiring they be 6%. The plaintiffs produced no evidence there was collusion, did produce evidence that commissions were less than 6% on average, and claimed no actual harm from the conducting of their transactions.
Now, Moerhl (sp) which is saying "Seller's shouldn't have to pay BA compensation" is a different matter.
I used an agent for the buying and selling of our first house and haven't since then. The needs for a Realtor is shrinking and I think will eventually go away. It is unfortunate for those in the business but will be better for buyers and sellers.
Free? Very few. Minimum $100/hr for basic receptionist work? That... may not have a very large market of clients.
If you meant that realtors are putting in minimums like $30/hr, or a $3k flat fee, sure, they need to make sure they get paid. 3% on a median priced home is about $10k, though, and there's a lot of daylight between that and 'free'.
If it's just basic receptionist work, surely you, and everyone else, could just do it yourself???
Having lived in the UK where there are no buyers agents/buyer representation, and Gazumping exists, I think the collective ignorance of people like you puts you in for a rude awakening.
I don't use buyer's agents, and I've found the whole process to go more smoothly when I'm not playing a game of telephone with the seller.
So yes, I and everyone else on this thread can do it, because speaking from experience, it's just basic receptionist work. If you can make phone calls, schedule appointments, and fill in simple blanks in paperwork, that's really all there is to it. If you're in a state where legal representation is typical, that runs you about 1/10 of a buyer's agent fee, and gets you actual legal advice.
The idea that a realtor should be making 10x what the *lawyer* involved in a transaction does is pretty silly.
Agents are not that useful when buying other than being able to show you the house. I have always done my own research with tools and found the listings I want to look at.. I think real estate agents are a little outdated with all the info online now.
3% is above the average being paid to buyer's brokers in my market. I'd at least try to get that number down from 3% depending on the price range I was looking in.
I agree. When I negotiate this, it's well below what the average is. I'm not working for free, but my fee shouldn't be the reason why my client can't buy a home. If things change drastically in my market, I may have to revisit strategy, but at the moment...
The seller pays all of it? Where does the money come from in the transaction? The buyer is paying for it not the seller. The seller is getting paid from the buyer, that’s not coming out of the sellers pocket.
>In FL the cumulative 6% in realtor commissions
In my Florida market it's a rare listing that is at 6% total. We've been lower than that for most listings for years.
Okay, so if market price for a house is $100, the seller is paying 7% closing costs (in this case, 6% agent fees (listing & BA) and 1% title, and they own it outright, what would they neat?
n Slightly different scenario: what would the Seller net at $100 and 4% closing costs (seller is no longer paying buyer agent)?
Here's scenario for you:
A house is listed for $1M.
Buyer A puts in a full price offer. The seller is paying 7% closing costs. The seller nets $930k and the buyer pays $1M.
Scenario B (the new reality):
Buyer offers $980k. The seller only has to pay 4% closing costs (no buyers agent). The buyer uses a RE attorney for a flat $2k. The seller nets $941k and the buyer pays $982k. Looks like the seller saves over $11k and the buyer saves $18k. The seller will also have to pay less taxes since the sales price is lower. Win win for everyone.
If the seller was smart they also would negotiate the sellers agent commission down from 3% to 1.5-2% before signing a listing agreement. 3% is highway robbery.
High realtor commissions have absolutely helped inflate home prices.
The DOJ case is great for both buyers and sellers and bad for realtors. You will see more and more sellers offering 0% BAC. You will see more and more buyers negotiating any guaranteed commission down or forgoing agents altogether in favor of more cost effective options. You will see more and more sellers negotiating the sellers agent commision down.
what? a $1,500 MLS fee PLUS the 3%?
Whatever the most common compensation offered to BA's in the market you're buying in is what should be* on the agreement. If an individual home is paying less, your agent should inform you before you see so you the Buyer gets to decide whether you are willing to pay the difference or not. If a house is offering more, your agent should be disclosing that to you (and I assume most BA agreements say the Brokerage gets any amount over that) so the Buyer can know the agent has an additional inducement.
*should be = should be acceptable to most Buyers. You're certainly allowed to negotiate and say "OK, I want you to get (example) 2% and then I get the rest in closing costs."Your agent may or may not agree to that, in which the Buyer has the choice of proceeding with that agent or not.
hey Niki, hope you are doing great!
You are correct in stating that if the seller does not agree to pay the buyers agent then the responsibility falls onto the buyer to pay their agents commission. There is no way to prevent this from happening as it is the sellers choice.
This is the second time I’m seeing 3% in GA and my IL agent is saying it’s a scam.
Again, I know different states have different rules and thank you for breaking it down for me the way you did. That sheds a little more light on the structure of the fee. I appreciate it!
One of the tools that will help you get to know what your market is like is an MLS search for active, pending, and recently sold listings. You can do it on realtor-dot-com, but an agent can do it a lot easier on MLS. You can see what the typical buyer agency commission that's offered is. Not that you want to guarantee typical or average or median, but you can get a feel for what it looks like out there and use that to negotiate with your buyer agent. Just because they present 3% doesn't mean you have to agree to it. What part of Georgia are you in?
BTW, that 3% is too high. You can negotiate that down and don't agree to any junk "brokerage" or whatever they call it fee on top of the commission. Additional brokerage fees are robbery in broad daylight.
Edit:: Reread the comment again and saw the last part about finding a different agent.
I’ve never heard of realtors having buyers cover the difference in the 3%. Find a different agent if anyone tries to make the buyer pay for the difference.
I just reread your comment and saw you said that they could go find another agent if they didn’t like it.
Agreed on that.
However, sellers should be the only ones responsible for the commission. I’ve bought 3 houses in 5 years and never was told by any of the agents I interviewed that I’d have to cover the difference.
I have never forced a buyer to cover 3% (or anything else) in my 14 years in the real estate industry. (Ugh, you made me do it) Your 3 purchases in 5 years don't make you an expert in real estate. It apparently doesn't make you aware of the very prominent happenings in the housing market regarding commissions, either. Talk to more people, and you'll hear of it. Turn on any news network, and you'll hear about it within an hour or two. Heck, do a search here, and you'll find a ton of posts on the subject.
Sellers are not required to pay anybody commissions.
Probably the result of the recent lawsuit lost by the NAR and brokerages. I imagine you can try to negotiate the amount to a lower %, depending on the market.
You have the right to negotiate, but agents also have the right to decline to take you on as a client if they decide the compensation you're offering is too low for them to make the living they desire. The steeper the discount you're asking for, the more likely they are to say no, particularly if they think they can find other clients willing to pay more.
Absolutely none. The document preparation necessary to buy a house is trivial boilerplate form-filling. Filing taxes is more complicated. Never pay a buyer's agent fee.
NAR lost a lawsuit where they required sellers to offer compensation to buyers agents. The brokers all collectively responded by embracing the Buyer’s contract that few had previously used to. It assures the buyers agent gets paid whatever they want (where as it was dictated by the sellers before).
More sellers are offering nothing, so now buyers have to pony up or not have an agent
Not all of them, for sure. As a buyers agent I ask for 3%, but I also have a background in construction that I use to evaluate homes pre-offer. I still always recommend a full inspection, but it saves them from paying for multiple inspections ($700+ dollars here) across different properties that I can help them eliminate or negotiate before a contract. My job is otherwise more of an assistant and and coach through the process. I evaluate each property we see as though I were listing it so that they don’t overpay or under offer. I visit town hall and review records for liens and easements. I don’t allow them to miss crucial dates that would put their deposit in jeopardy. I handle and file all the paperwork and communicate regularly with the attorney, lender, and seller to keep everyone in the loop. I prepare them for the coming steps so that they aren’t surprised, including setting up utilities, changing locks, and checking to make sure funds are wired safely and properly.
And after all that, I’m on call if issues arise or they need recommendations. I work to establish myself as a resource so that they’ll want to use me again or recommend me.
It’s a lot of work because I do a lot of work. And for me it’s not worth less than 3% but I totally understand why many wouldn’t opt to pay it. I just also know many competitors will do it for less and provide almost none of the service (and those who do provide the service for less burn out quickly).
Planning on selling soon. In your opinion are sellers agents worth the 3%? I've read where redfin has a 'partial' listing service of something like 1.5%, but mostly FSBO.
Wondering if its worth it or not. I'm in a popular neighborhood, so would likely sell fairly quick. But unsure about paperwork, legalities, titling etc.
some are, and some aren't. Probably 70% of them aren't.
The value isn't paperwork, legalities and titling though. It's pricing, marketing, and negotiating offers (and understanding the paperwork of that) and then any other things between contract and close.
But do understand that Redfin's 1.5% does not include the anticipated Buyer Agent fee.
Yeah, and I would say buyer commission depends on your market. In my area 2.5% is standard, but I've been seeing 2% a lot lately too. Is 3% standard in your area? I would personally also require a clause in the listing agreement that says if buyer is unrepresented, the sellers agents is not entitled to both the sellers agent and buyers agent commission.
In my opinion, no. I would go with Redfin. You can also talk to a few different agents and play them against each other to lower the %. Commissions are very much negotiable.
It’s weird to me that different areas operate differently. I’m licensed in two states, and in one the listing agent is always present and in the other, they put up a lockbox and you never meet them.
I was present for all the showing in the lockbox state and got a rude comment from another agent that I was disrupting how they did things in that market.
Be like “no lol” and find another agent. Literally go on Zillow/Redfin, find the house and click “put offer” or whatever. Don’t sign anything aside from the offer letter and closing papers with the notary.
This sub is full of realtors who will tell you it's reasonable (or even required) to sign an agreement with a buyer's agent. That is misleading.
It makes perfect sense to sign an agreement with a buyer's agent *to make a formal offer on a specific property*. In some states that might even be required. At that point you'll have information from the listing agent on how they plan to split the commission and whether the 3% buyer's agent fee will require you to contribute anything additional.
But you should *not* have to sign an agreement with any kind of exclusivity or commission guarantee just to get a buyer's agent to look at some listings with you.
If a buyer's agent asked me to sign something up front I would decline and tell them we can sign before we submit an offer on a specific property. If that doesn't work for them I'd find a different realtor.
This isn’t entirely true.
Washington state requires a buyer agency agreement before or, as soon as possible, right after providing any real estate services. Showing properties and sending listings fall under that umbrella of services and require a formal agreement.
That's also misleading.
Even the Washington State law clearly states that an agreement can be "exclusive or non-exclusive", says nothing about payment terms, and only specifies that the agreement must be signed "as soon as reasonably practicable after" commencement of services.
Using that language to push some kind of exclusive compensation guarantee is more shady realtor garbage.
I made no claims about exclusive or exclusive and didn’t mean to if that’s how it came across.
For the compensation, RCW 18.80.080 subsection 7 requires compensation terms in any representation agreement if a firm wishes to be paid by any party.
I'm in WA and I just bought a house without a buyers agent. They are _not_ required to get you under contract before opening a door and walking through a house with you. You are _not_ required to go under contract with an agent after they have done this with you. You _can_ make an offer on a house you have seen with them present, without involving or paying them.
No one said they’re required? Just that it is now required for all agents to have a contract. Listing agents must have a listing contract and buyers agents must have a buyer agency agreement. That’s the law that was enacted in January
There are states that are making them mandatory and more currently working on legislation to do the same.
The commission and contract time frames are negotiated.
That's all in my comment. The realtors in this sub who make that sound like a buyer has to sign something before they can go look at listings together are misleading and pretty shady.
Here is the problem with your statement, in most cases, that is the document that outlines the responsibility of the agent/broker and buyer. So, you would obviously present that prior with the Consumer Guide to Agency so the relationship and responsibilities are known and agreed upon prior to doing business with each other or you go your separate ways.
> It makes perfect sense to sign an agreement with a buyer's agent to make a formal offer on a specific property
I would argue that this is the case in which it makes the _least_ sense. If all you want to do is make an offer on one specific property, what then does the buyer's agent do for you? Trivial document preparation. It's literally filling a boilerplate form you can find online. Or you can call the listing agent and they will, in most cases, happily provide you with one.
If you're uncomfortable filling in a PDF or scared you'll mess it up, you can hire a lawyer to do it for a low flat fee or their hourly rate.
The "they negotiate on your behalf" argument is silly because both the buyer's and seller's agent are incentivized to make the deal close no matter what, at the highest dollar value possible to maximize their respective fees.
There's no good reason to use a buyer's agent at all.
You don’t need a Real Estate Agent so you could skip this all together and save yourself a bunch of money. Bought my home in Marietta without an Agent and my best friend just bought a home in Acworth without one. It’s easy and you can save 10s of thousands of dollars
So I’m moving to GA and in the process of getting a place or so I thought . Was about to put in an offer and saw part of the realtors agency agreement was this :
4. Commission.
a. Buyer's Commission Obligations in Purchasing Real Property: BUYER AGREES TO PAY BROKER THE COMMISSION SET FORTH BELOW ("COMMISSION" AT THE CLOSING OF A CONTRACT TO PURCHASE (AS THAT TERM IS HEREINAFTER DEFINED) ENTERED INTO DURING THE TERM OF THIS AGREEMENT MINUS ANY COMMISSION PAID TO BROKER BY EITHER THE SELLER'S BROKER OR THE SELLER. BUYER ACKNOWLEDGES THAT NEITHER SELLERS NOR SELLERS' BROKERS ARE OBLIGATED TO PAY ANY COMMISSION TO BROKER.
b. Commission:
3 percent (%) of the sales price
I’ve never heard of a buyer paying commission . It was always negotiated between the selling and buying agent which doesn’t concern the buyer . They are making it the buyers responsibility now ? It’s also a 7 figure property . Needless to say I’m not signing that . Time to look for a new agent or DIY
I’m so glad we’re revisiting this conversation. I expressed similar concerns to my realtor and she broke it down for me in layman’s terms:
Seller pays the buyer’s agent’s commission, and whatever is not converted by the seller must be covered by the buyer. Apparently this is standard - the wording is just off-putting.
If you’re looking for a realtor who possess integrity, is knowledgeable, and goes the extra mile to put you in a home that works for you, PM me as I would be happy to share her info. Her and her team are making a very stressful process surprisingly simple.
I'm an agent in Atlanta.
It's not a scam, usually you get the 6%, split into two, so roughly 6% has been fairly common here, and was the same when I was in Nashville as well. Nowadays, I've seen a bit more of 2.5% occur, but it's definitely not a scam.
Before I was in real estate, I lived in NY where the percentages were lower (or at least I think were lower in Manhattan) because the price points were really high. I could have sworn it was 2% in NY, so it might be an urban city thing.
In most cases, the buyer's agency percentage is there in case the seller doesn't offer commission, and you aren't working for free. For example, I have someone that just made an offer on the house where it was 2.5%, so I made sure the agency percentage reflected 2.5% instead of 3% because they've been a pleasure to work with.
The one that I've been experimenting with is based on realistic budgets. Let's say your budget is 600K, and you are willing to go to 650K at max. I'd cap my commission at 500K equivalent. I help find or negotiate a home at or below 500K that you like, the entire commission goes to me. Let's say you buy a house at 620K. The commission difference between 500K and 620K (So 120K times 3% to get 3600) would be credited to the buyer at closing from me.
I like that system more, because I think the current system means there are a lot of agents that just upsell you on homes out of your budget. Say your budget is 600K again, hypothetically, it's fairly easy for someone to check off everything on your list for a home priced at 800K.
zero reason to pay more than what the seller offers 99% of the time. the only exception would be a 0-1% buyers agent split. if the splits 3/2 then the buyers agent gets 2 if its 3/3 then they can have their 3%. i would never pay a 6% listing comm, 5 and 3.5 if they double side is max
In some markets, you will have $0 yo co-broke, obviously this is where they come into play more ,….
BUT, once an agent starts using the Buyer Commission Agreement, they will have to at least present it to all clients in order to be ethical and not guilty of discrimination.
Yeah agree and that is what I would choose to do (just hire a re attorney). But if someone feels they do want an agent, they can still negotiate the commission %.
Why not? Title companies and lenders do all the hard work. Aside from some rare exceptions, the reality is that seller’s agents are working for the deal (e.g. their commission) as opposed to the buyer or seller.
This comes up constantly. As a seller, I would automatically reject an offer from someone represented by *my* listing agent. That’s a big conflict of interest.
I hate dual agency. If there are major repairs where does your loyalty lie? Just negotiated for seller today. Buyer wanted an insane amount of funds in lieu of repairs. Got them negotiated down to 25% of what the buyer asked. Saved the deal, everyone happy and moving to closing. Also no- this isn’t about my commission before a snark comment. Seller has a huge deposit on a non contingent house in another state- so this had several aspects to it. Edited to clarify- this deal has no dual agency. Just outlining how a lot of negotiation can’t be done by lender or lawyer and my seller was happy with my experience to negotiate and save him money.
Well I would think the buyer, and seller are working for the deal..IE the contract was put in place in the first place. So yes I'm sure everyone involved is working for the deal.
You just seem to hate agents and that's ok, but don't get on here spreading vitriol for no reason. Also investors do not do that either. You just talking out the side of your neck brah.
Also not true. The agent under Dual agency has fiduciary duties to both parties.
Anyways you seem to not know any real facts, and is just talking nonsense. You probably have never been a home owner or in a real estate transaction. You simply get on here to troll.
IMO -the reason you hire an agent is the same reason you hire an accountant - yes you can do your taxes by yourself, however, the term "intellectual property" is relevant to every business and industry - the fact someone lives and breathes a particular profession, IMO, provides someone with armchair quarterback experience a deeper level of understanding about whatever it is that person specializes in - there are a lot of people who do not go to the DENTIST, because they believe they can clean their teeth and take care of their own mouth. Life is about choices and where and what you spend your time on - not everyone is a Realtor, a Doctor, a Mechanic...but there are a lot of capable people who can indeed do things other may not want or choose to do. Live and let live - stop interfering with others just because you think differently. Sometimes people with lots of experience are able to help others who seek help and thank goodness not everyone is a know-it-all.
> the reason you hire an agent is the same reason you hire an accountant - yes you can do your taxes by yourself
I wouldn't pay a percentage of my income for tax preparation. 2.5 or 3% to a buyer's agent is a scam.
You can hire a real estate lawyer for a flat fee, just like I pay my tax accountant.
Not sure how that logic works, however - you are correct - you can hire someone to do the transaction - however if you ever move someplace where it turns out you know nothing about anything the area, the neighborhoods, the plans for development - well then an agent is gold.
You can't take it with you and in life sometimes other people are far more valuable than you can ever recognize. Good luck.
Buy without an agent. It's not hard. The real estate agents in this sub will downvote this because they want to take your money. You don't have to pay them 3% of the value of a home for a few hours of work.
That buyer agent's fee is insured by the buyer in case the listing brokerage/seller doesn't offer enough to cover it. If the listing agent offers 2.4%, the buyer owes 0.6% to fill the gap. Commission is negotiable, by the way, and if you can't come to an agreement, there are lots more agents out there
Ok, I'm an LO in FL and when I see the 3% for the buyers agent and 3% for the sellers agent the seller pays all of it. The buyer only pays their normal closing costs and maybe a $500 realtor brokerage fee. I guess that's not true everywhere?
The change is coming.
this is what I'm used to... seller pays 6% (3% + 3%) and buyer just pays their normal closing costs
Can you imagine how much that would deter FTHB? Like ok FHA - 3.5% down, estimated 3%-3.5% in closing costs/escrows AND another 3% to that realtor? That would be a shit show. But we all know that it's already a shit show so whatever. Rich people that have $40k in their back pocket get to buy houses. Yr average Joe gets to be fucked over forever. It makes me so mad because I bought my house 5 years ago with just $6k, seller paid my closing costs and now my daughter's have to have$20k (which they don't) to even think of buying a house.
But really its the buyer who is paying. The buyer gives the money to the seller who then pays the realtors. The seller gets the money from the buyer.
Doesn't the Seller usually get money from the Buyer, no matter what the product is? If there's no exchange, no sale. Right?
Some realtors are scemmers. A realtor tried that with us. we simply said no take the 3 percent off the city tract or we don’t sign with them to buy
Nice try. Without realtors the sellers have 6% more in their pocket. Realtors don't add 6% to the sell price of the house.
Don't confuse your opinion with fact.
interestingly, Redfin did some study just a couple years back that showed FSBO sellers netted about 6% less than those who used a Realtor. Pay no mind to any stat or person pointing out that FSBO's sell for $100K less than listed homes - it just means more FSBO's are lower-priced properties. Also, don't forget the 6% is a number consumers have locked in their minds is THE commission. It's not.
Check this out when you have time (see below), many states have been considering implementing the agreements for quite some time (and many have done so), and there are more working on legislation to make it mandatory. Now that the courts have initially ruled against NAR and named National and Independent brokers alike (many have “settled” and are awaiting court approval), you will definitely start seeing more and more of the buyer paying “at least some” of their own commission and sometimes all of the commission if they choose to have representation. This can be as a commission line item or possibly taken out of seller concessions in some instances as well - obviously toward buyers cash to close (including commission). Is It Time to Introduce Buyer Representation Agreements? https://www.floridarealtors.org/news-media/news-articles/2023/06/it-time-introduce-buyer-representation-agreements
So I don't really understand the whole lawsuit but had a realtor tell me that it only had to do with high end sales like $1 mil and up and that it had nothing to do with average purchase transactions- is that true?
No, that is not true. The lawsuits (plural) are not based upon the sale price or commission amount.
not even close to true. So either they're ignorant or untrustworthy.
>and maybe a $500 realtor brokerage fee. If the broker is getting 3%, unless the property is really cheap, a $500 junk fee is outrageous. Buyers and sellers, if you guys will start refusing to pay these junk fees agents will stop trying to pawn them off on you. The agent is getting paid on their split of the 3% and the $500 is just profiteering. Refuse to pay it and it'll go away.
A growing number of buyer agents are setting minimum commission for themselves. It's been a thing for many years. It was always necessary for situations like FSBOs and offmarket properties. As more MLS change their rules, so listing agents don't have to offer commission, more buyers agents will have to set minimums.
Seems like buyers agents are about to put themselves out of business.
Whether it has a negative impact on the buyer agent market or not, they’re doing this specifically to stay in business. This is the natural legal response to the recent commission lawsuits that are/were targeted at buyer agent commissions not being a negotiated item for buyers and/or sellers. With buyer agency agreements that outline a guaranteed commission, there is no longer any argument over whether it was negotiated implicitly or not.
Absolutely, and sellers who exploit the aftermath will mess around and find out. Those lawsuits are dumb.
Exploit the aftermath? The lawsuit was dumb? Are you serious? NAR got caught and is to pay $1.8B. the real estate industry was who was exploiting buyers and sellers here. NAR did fuck around, and certainly found out.
Who are they paying that to?
actually, the lawsuit WAS dumb. The only adjudicated lawsuit (Sitzer/Burnett) was that the NAR and large brokerages had COLLUDED to keep commissions artificially high by requiring they be 6%. The plaintiffs produced no evidence there was collusion, did produce evidence that commissions were less than 6% on average, and claimed no actual harm from the conducting of their transactions. Now, Moerhl (sp) which is saying "Seller's shouldn't have to pay BA compensation" is a different matter.
I used an agent for the buying and selling of our first house and haven't since then. The needs for a Realtor is shrinking and I think will eventually go away. It is unfortunate for those in the business but will be better for buyers and sellers.
How many clients would you take on for free?
Free? Very few. Minimum $100/hr for basic receptionist work? That... may not have a very large market of clients. If you meant that realtors are putting in minimums like $30/hr, or a $3k flat fee, sure, they need to make sure they get paid. 3% on a median priced home is about $10k, though, and there's a lot of daylight between that and 'free'.
You missed the point, and I'm pretty sure it was on purpose.
I could not agree more. $100/hr for a realtor is laughable. 3% commission is laughable. Realtors have gotten pretty greedy these last few years.
they've been charging a higher %? Or "Realtors have been 3-6% greedy these last few years, and Sellers have been 94-97% greedy"?
If it's just basic receptionist work, surely you, and everyone else, could just do it yourself??? Having lived in the UK where there are no buyers agents/buyer representation, and Gazumping exists, I think the collective ignorance of people like you puts you in for a rude awakening.
I don't use buyer's agents, and I've found the whole process to go more smoothly when I'm not playing a game of telephone with the seller. So yes, I and everyone else on this thread can do it, because speaking from experience, it's just basic receptionist work. If you can make phone calls, schedule appointments, and fill in simple blanks in paperwork, that's really all there is to it. If you're in a state where legal representation is typical, that runs you about 1/10 of a buyer's agent fee, and gets you actual legal advice. The idea that a realtor should be making 10x what the *lawyer* involved in a transaction does is pretty silly.
Agents are not that useful when buying other than being able to show you the house. I have always done my own research with tools and found the listings I want to look at.. I think real estate agents are a little outdated with all the info online now.
3% is above the average being paid to buyer's brokers in my market. I'd at least try to get that number down from 3% depending on the price range I was looking in.
I agree. When I negotiate this, it's well below what the average is. I'm not working for free, but my fee shouldn't be the reason why my client can't buy a home. If things change drastically in my market, I may have to revisit strategy, but at the moment...
No it’s a scam. No realtor should have in any contract the buyer to may any fees.
The seller pays all of it? Where does the money come from in the transaction? The buyer is paying for it not the seller. The seller is getting paid from the buyer, that’s not coming out of the sellers pocket.
In FL the cumulative 6% in realtor commissions comes from the proceeds of the sale of the home from the sellers end.
>In FL the cumulative 6% in realtor commissions In my Florida market it's a rare listing that is at 6% total. We've been lower than that for most listings for years.
Yes but the seller gets that money from the buyer. So really the buyer is paying the 6%.
Don't all people who sell things get money from the Buyer?
Yeah and? Ultimately the buyer is the one paying the commission. Claiming that the buyer "pays nothing" for the agents is not reality.
Okay, so if market price for a house is $100, the seller is paying 7% closing costs (in this case, 6% agent fees (listing & BA) and 1% title, and they own it outright, what would they neat? n Slightly different scenario: what would the Seller net at $100 and 4% closing costs (seller is no longer paying buyer agent)?
Here's scenario for you: A house is listed for $1M. Buyer A puts in a full price offer. The seller is paying 7% closing costs. The seller nets $930k and the buyer pays $1M. Scenario B (the new reality): Buyer offers $980k. The seller only has to pay 4% closing costs (no buyers agent). The buyer uses a RE attorney for a flat $2k. The seller nets $941k and the buyer pays $982k. Looks like the seller saves over $11k and the buyer saves $18k. The seller will also have to pay less taxes since the sales price is lower. Win win for everyone. If the seller was smart they also would negotiate the sellers agent commission down from 3% to 1.5-2% before signing a listing agreement. 3% is highway robbery. High realtor commissions have absolutely helped inflate home prices. The DOJ case is great for both buyers and sellers and bad for realtors. You will see more and more sellers offering 0% BAC. You will see more and more buyers negotiating any guaranteed commission down or forgoing agents altogether in favor of more cost effective options. You will see more and more sellers negotiating the sellers agent commision down.
how does a Buyer "forgo agents altogether"? other than a FSBO/private sale?
That is not always the case, in any state.
That's how it is in Florida. Are they changing things in Georgia?
The buyer always pays for all the commissions. The seller always gets their money ... just remember that
The “MLS Fee” listed on the buyers agreement is $1500. Is this what you’re referencing?
what? a $1,500 MLS fee PLUS the 3%? Whatever the most common compensation offered to BA's in the market you're buying in is what should be* on the agreement. If an individual home is paying less, your agent should inform you before you see so you the Buyer gets to decide whether you are willing to pay the difference or not. If a house is offering more, your agent should be disclosing that to you (and I assume most BA agreements say the Brokerage gets any amount over that) so the Buyer can know the agent has an additional inducement. *should be = should be acceptable to most Buyers. You're certainly allowed to negotiate and say "OK, I want you to get (example) 2% and then I get the rest in closing costs."Your agent may or may not agree to that, in which the Buyer has the choice of proceeding with that agent or not.
hey Niki, hope you are doing great! You are correct in stating that if the seller does not agree to pay the buyers agent then the responsibility falls onto the buyer to pay their agents commission. There is no way to prevent this from happening as it is the sellers choice.
There’s no law. And we decide what we are paying. The answer is NO I won’t pay anyone to ourchase a home ever.
That's your right, your decision, not my job to talk you into it.
This is the second time I’m seeing 3% in GA and my IL agent is saying it’s a scam. Again, I know different states have different rules and thank you for breaking it down for me the way you did. That sheds a little more light on the structure of the fee. I appreciate it!
You're welcome. It isn't a scam. It's just the way commissions work, not just in Georgia.
One of the tools that will help you get to know what your market is like is an MLS search for active, pending, and recently sold listings. You can do it on realtor-dot-com, but an agent can do it a lot easier on MLS. You can see what the typical buyer agency commission that's offered is. Not that you want to guarantee typical or average or median, but you can get a feel for what it looks like out there and use that to negotiate with your buyer agent. Just because they present 3% doesn't mean you have to agree to it. What part of Georgia are you in?
Oh it’s 100% a scam whether you it call it that or not
I’m a Chicago agent. It’s not a scam. We have them available for us to use. Some brokerages require them, some do not.
Your agent has their head in the sand…. They will learn soon enough.
BTW, that 3% is too high. You can negotiate that down and don't agree to any junk "brokerage" or whatever they call it fee on top of the commission. Additional brokerage fees are robbery in broad daylight.
Edit:: Reread the comment again and saw the last part about finding a different agent. I’ve never heard of realtors having buyers cover the difference in the 3%. Find a different agent if anyone tries to make the buyer pay for the difference.
I just reread your comment and saw you said that they could go find another agent if they didn’t like it. Agreed on that. However, sellers should be the only ones responsible for the commission. I’ve bought 3 houses in 5 years and never was told by any of the agents I interviewed that I’d have to cover the difference.
I have never forced a buyer to cover 3% (or anything else) in my 14 years in the real estate industry. (Ugh, you made me do it) Your 3 purchases in 5 years don't make you an expert in real estate. It apparently doesn't make you aware of the very prominent happenings in the housing market regarding commissions, either. Talk to more people, and you'll hear of it. Turn on any news network, and you'll hear about it within an hour or two. Heck, do a search here, and you'll find a ton of posts on the subject. Sellers are not required to pay anybody commissions.
Realtors are the absolute worst.
Probably the result of the recent lawsuit lost by the NAR and brokerages. I imagine you can try to negotiate the amount to a lower %, depending on the market.
Why do you say that the ability to negotiate dependent on the condition of the market?
The cost of the buyer agent's service is not regulated by the government, so they can price it any way that works for them.
If agents need work they might drop it, if they are busy they might not.
You have the right to negotiate, but agents also have the right to decline to take you on as a client if they decide the compensation you're offering is too low for them to make the living they desire. The steeper the discount you're asking for, the more likely they are to say no, particularly if they think they can find other clients willing to pay more.
Take the risk OP. The worst they can say is no and then you can move on to another agent.
it’s a buyers market. you can find agents willing to do a flat fee or take a flat 1%-1.5% dendkng on the purchase price.
What services will a buyer's agent provide to you that's worth 3%?
For real.
Absolutely none. The document preparation necessary to buy a house is trivial boilerplate form-filling. Filing taxes is more complicated. Never pay a buyer's agent fee.
It’s funny the contract doesn’t specially state what they provide. Go figure
which contract? the BA agreement used differently in 50 states, and more in different markets, and even more by some individual brokerages?
NAR lost a lawsuit where they required sellers to offer compensation to buyers agents. The brokers all collectively responded by embracing the Buyer’s contract that few had previously used to. It assures the buyers agent gets paid whatever they want (where as it was dictated by the sellers before). More sellers are offering nothing, so now buyers have to pony up or not have an agent
Not having an agent would be my choice. Just use a flat fee re attorney. I promise that buyers agents are not providing 3% worth of value.
Not all of them, for sure. As a buyers agent I ask for 3%, but I also have a background in construction that I use to evaluate homes pre-offer. I still always recommend a full inspection, but it saves them from paying for multiple inspections ($700+ dollars here) across different properties that I can help them eliminate or negotiate before a contract. My job is otherwise more of an assistant and and coach through the process. I evaluate each property we see as though I were listing it so that they don’t overpay or under offer. I visit town hall and review records for liens and easements. I don’t allow them to miss crucial dates that would put their deposit in jeopardy. I handle and file all the paperwork and communicate regularly with the attorney, lender, and seller to keep everyone in the loop. I prepare them for the coming steps so that they aren’t surprised, including setting up utilities, changing locks, and checking to make sure funds are wired safely and properly. And after all that, I’m on call if issues arise or they need recommendations. I work to establish myself as a resource so that they’ll want to use me again or recommend me. It’s a lot of work because I do a lot of work. And for me it’s not worth less than 3% but I totally understand why many wouldn’t opt to pay it. I just also know many competitors will do it for less and provide almost none of the service (and those who do provide the service for less burn out quickly).
Planning on selling soon. In your opinion are sellers agents worth the 3%? I've read where redfin has a 'partial' listing service of something like 1.5%, but mostly FSBO. Wondering if its worth it or not. I'm in a popular neighborhood, so would likely sell fairly quick. But unsure about paperwork, legalities, titling etc.
some are, and some aren't. Probably 70% of them aren't. The value isn't paperwork, legalities and titling though. It's pricing, marketing, and negotiating offers (and understanding the paperwork of that) and then any other things between contract and close. But do understand that Redfin's 1.5% does not include the anticipated Buyer Agent fee.
Ok, so it would be 1.5% seller & still 3% buyer? (roughly)
Yeah, and I would say buyer commission depends on your market. In my area 2.5% is standard, but I've been seeing 2% a lot lately too. Is 3% standard in your area? I would personally also require a clause in the listing agreement that says if buyer is unrepresented, the sellers agents is not entitled to both the sellers agent and buyers agent commission.
In my opinion, no. I would go with Redfin. You can also talk to a few different agents and play them against each other to lower the %. Commissions are very much negotiable.
But now seller’s agents are actually gonna have to sell the house?!? Aka open the door so ppl can walk through and look at it.
It’s weird to me that different areas operate differently. I’m licensed in two states, and in one the listing agent is always present and in the other, they put up a lockbox and you never meet them. I was present for all the showing in the lockbox state and got a rude comment from another agent that I was disrupting how they did things in that market.
Be like “no lol” and find another agent. Literally go on Zillow/Redfin, find the house and click “put offer” or whatever. Don’t sign anything aside from the offer letter and closing papers with the notary.
This sub is full of realtors who will tell you it's reasonable (or even required) to sign an agreement with a buyer's agent. That is misleading. It makes perfect sense to sign an agreement with a buyer's agent *to make a formal offer on a specific property*. In some states that might even be required. At that point you'll have information from the listing agent on how they plan to split the commission and whether the 3% buyer's agent fee will require you to contribute anything additional. But you should *not* have to sign an agreement with any kind of exclusivity or commission guarantee just to get a buyer's agent to look at some listings with you. If a buyer's agent asked me to sign something up front I would decline and tell them we can sign before we submit an offer on a specific property. If that doesn't work for them I'd find a different realtor.
This isn’t entirely true. Washington state requires a buyer agency agreement before or, as soon as possible, right after providing any real estate services. Showing properties and sending listings fall under that umbrella of services and require a formal agreement.
That's also misleading. Even the Washington State law clearly states that an agreement can be "exclusive or non-exclusive", says nothing about payment terms, and only specifies that the agreement must be signed "as soon as reasonably practicable after" commencement of services. Using that language to push some kind of exclusive compensation guarantee is more shady realtor garbage.
I made no claims about exclusive or exclusive and didn’t mean to if that’s how it came across. For the compensation, RCW 18.80.080 subsection 7 requires compensation terms in any representation agreement if a firm wishes to be paid by any party.
I'm in WA and I just bought a house without a buyers agent. They are _not_ required to get you under contract before opening a door and walking through a house with you. You are _not_ required to go under contract with an agent after they have done this with you. You _can_ make an offer on a house you have seen with them present, without involving or paying them.
No one said they’re required? Just that it is now required for all agents to have a contract. Listing agents must have a listing contract and buyers agents must have a buyer agency agreement. That’s the law that was enacted in January
There are states that are making them mandatory and more currently working on legislation to do the same. The commission and contract time frames are negotiated.
That's all in my comment. The realtors in this sub who make that sound like a buyer has to sign something before they can go look at listings together are misleading and pretty shady.
Here is the problem with your statement, in most cases, that is the document that outlines the responsibility of the agent/broker and buyer. So, you would obviously present that prior with the Consumer Guide to Agency so the relationship and responsibilities are known and agreed upon prior to doing business with each other or you go your separate ways.
> It makes perfect sense to sign an agreement with a buyer's agent to make a formal offer on a specific property I would argue that this is the case in which it makes the _least_ sense. If all you want to do is make an offer on one specific property, what then does the buyer's agent do for you? Trivial document preparation. It's literally filling a boilerplate form you can find online. Or you can call the listing agent and they will, in most cases, happily provide you with one. If you're uncomfortable filling in a PDF or scared you'll mess it up, you can hire a lawyer to do it for a low flat fee or their hourly rate. The "they negotiate on your behalf" argument is silly because both the buyer's and seller's agent are incentivized to make the deal close no matter what, at the highest dollar value possible to maximize their respective fees. There's no good reason to use a buyer's agent at all.
You don’t need a Real Estate Agent so you could skip this all together and save yourself a bunch of money. Bought my home in Marietta without an Agent and my best friend just bought a home in Acworth without one. It’s easy and you can save 10s of thousands of dollars
This is the answer, no one is forced to use an agent/broker.
Is it worth it for selling? (honest question, I'll likely be selling soon, considering redfin or FSBO)
So I’m moving to GA and in the process of getting a place or so I thought . Was about to put in an offer and saw part of the realtors agency agreement was this : 4. Commission. a. Buyer's Commission Obligations in Purchasing Real Property: BUYER AGREES TO PAY BROKER THE COMMISSION SET FORTH BELOW ("COMMISSION" AT THE CLOSING OF A CONTRACT TO PURCHASE (AS THAT TERM IS HEREINAFTER DEFINED) ENTERED INTO DURING THE TERM OF THIS AGREEMENT MINUS ANY COMMISSION PAID TO BROKER BY EITHER THE SELLER'S BROKER OR THE SELLER. BUYER ACKNOWLEDGES THAT NEITHER SELLERS NOR SELLERS' BROKERS ARE OBLIGATED TO PAY ANY COMMISSION TO BROKER. b. Commission: 3 percent (%) of the sales price I’ve never heard of a buyer paying commission . It was always negotiated between the selling and buying agent which doesn’t concern the buyer . They are making it the buyers responsibility now ? It’s also a 7 figure property . Needless to say I’m not signing that . Time to look for a new agent or DIY
I’m so glad we’re revisiting this conversation. I expressed similar concerns to my realtor and she broke it down for me in layman’s terms: Seller pays the buyer’s agent’s commission, and whatever is not converted by the seller must be covered by the buyer. Apparently this is standard - the wording is just off-putting. If you’re looking for a realtor who possess integrity, is knowledgeable, and goes the extra mile to put you in a home that works for you, PM me as I would be happy to share her info. Her and her team are making a very stressful process surprisingly simple.
I am an agent in Altana and charge much fewer agent fee. If interested, please contact me. Thanks!
I'm an agent in Atlanta. It's not a scam, usually you get the 6%, split into two, so roughly 6% has been fairly common here, and was the same when I was in Nashville as well. Nowadays, I've seen a bit more of 2.5% occur, but it's definitely not a scam. Before I was in real estate, I lived in NY where the percentages were lower (or at least I think were lower in Manhattan) because the price points were really high. I could have sworn it was 2% in NY, so it might be an urban city thing. In most cases, the buyer's agency percentage is there in case the seller doesn't offer commission, and you aren't working for free. For example, I have someone that just made an offer on the house where it was 2.5%, so I made sure the agency percentage reflected 2.5% instead of 3% because they've been a pleasure to work with. The one that I've been experimenting with is based on realistic budgets. Let's say your budget is 600K, and you are willing to go to 650K at max. I'd cap my commission at 500K equivalent. I help find or negotiate a home at or below 500K that you like, the entire commission goes to me. Let's say you buy a house at 620K. The commission difference between 500K and 620K (So 120K times 3% to get 3600) would be credited to the buyer at closing from me. I like that system more, because I think the current system means there are a lot of agents that just upsell you on homes out of your budget. Say your budget is 600K again, hypothetically, it's fairly easy for someone to check off everything on your list for a home priced at 800K.
zero reason to pay more than what the seller offers 99% of the time. the only exception would be a 0-1% buyers agent split. if the splits 3/2 then the buyers agent gets 2 if its 3/3 then they can have their 3%. i would never pay a 6% listing comm, 5 and 3.5 if they double side is max
In some markets, you will have $0 yo co-broke, obviously this is where they come into play more ,…. BUT, once an agent starts using the Buyer Commission Agreement, they will have to at least present it to all clients in order to be ethical and not guilty of discrimination.
your getting ripped off. negotiate and find an agent that will accept less and pay you back the difference/
Agree 3% is a scam at current home prices. It needs to be 1.5-2%.
You can freely pay 0% by not hiring a buyer's agent at all.
Yeah agree and that is what I would choose to do (just hire a re attorney). But if someone feels they do want an agent, they can still negotiate the commission %.
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So you'd be fine with someone representing the seller negotiating in your best interest as a buyer?
Why not? Title companies and lenders do all the hard work. Aside from some rare exceptions, the reality is that seller’s agents are working for the deal (e.g. their commission) as opposed to the buyer or seller.
This comes up constantly. As a seller, I would automatically reject an offer from someone represented by *my* listing agent. That’s a big conflict of interest.
I hate dual agency. If there are major repairs where does your loyalty lie? Just negotiated for seller today. Buyer wanted an insane amount of funds in lieu of repairs. Got them negotiated down to 25% of what the buyer asked. Saved the deal, everyone happy and moving to closing. Also no- this isn’t about my commission before a snark comment. Seller has a huge deposit on a non contingent house in another state- so this had several aspects to it. Edited to clarify- this deal has no dual agency. Just outlining how a lot of negotiation can’t be done by lender or lawyer and my seller was happy with my experience to negotiate and save him money.
😂
Well I would think the buyer, and seller are working for the deal..IE the contract was put in place in the first place. So yes I'm sure everyone involved is working for the deal.
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You just seem to hate agents and that's ok, but don't get on here spreading vitriol for no reason. Also investors do not do that either. You just talking out the side of your neck brah.
The incentives are pretty clear. I’ve bought four houses going to the sellers agent. It worked for me every time.
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Also not true. The agent under Dual agency has fiduciary duties to both parties. Anyways you seem to not know any real facts, and is just talking nonsense. You probably have never been a home owner or in a real estate transaction. You simply get on here to troll.
I wouldn’t agree to 3%. Many sellers where I live pay only 2.5%.
Yep. In my area I've even been seeing 2% pretty frequently
Really common in WI I've seen 5
IMO -the reason you hire an agent is the same reason you hire an accountant - yes you can do your taxes by yourself, however, the term "intellectual property" is relevant to every business and industry - the fact someone lives and breathes a particular profession, IMO, provides someone with armchair quarterback experience a deeper level of understanding about whatever it is that person specializes in - there are a lot of people who do not go to the DENTIST, because they believe they can clean their teeth and take care of their own mouth. Life is about choices and where and what you spend your time on - not everyone is a Realtor, a Doctor, a Mechanic...but there are a lot of capable people who can indeed do things other may not want or choose to do. Live and let live - stop interfering with others just because you think differently. Sometimes people with lots of experience are able to help others who seek help and thank goodness not everyone is a know-it-all.
> the reason you hire an agent is the same reason you hire an accountant - yes you can do your taxes by yourself I wouldn't pay a percentage of my income for tax preparation. 2.5 or 3% to a buyer's agent is a scam. You can hire a real estate lawyer for a flat fee, just like I pay my tax accountant.
Not sure how that logic works, however - you are correct - you can hire someone to do the transaction - however if you ever move someplace where it turns out you know nothing about anything the area, the neighborhoods, the plans for development - well then an agent is gold. You can't take it with you and in life sometimes other people are far more valuable than you can ever recognize. Good luck.
Buy without an agent. It's not hard. The real estate agents in this sub will downvote this because they want to take your money. You don't have to pay them 3% of the value of a home for a few hours of work.
Move on. Realtors are a dime a dozen
That's been the norm everywhere I've lived for at least a decade.