Using an exclusive buyer agent does
not cost anything more than using any other type of real estate agent.
Ask your Buyer's Network agent for details.
Will hiring a buyer broker cost me
more money?
In a standard real estate transaction, it doesn't cost a home buyer any more to use a
buyer broker than it would if they used any broker to assist in locating the right home.
Who really pays the real estate broker?
Whether a real estate broker represents the buyer or
seller, there is always a brokerage fee paid from a real estate transaction when a broker
is involved. The question of who pays the real estate brokerage fees is a matter of how
one looks at a real estate transaction and the terms of the contracts involved between the
parties.
Leading real estate industry trade associations
report that the vast majority of real estate transactions in the United States involve the
use of at least one brokerage firm, but more often than not there are two brokerage firms
involved. One broker usually works for the seller; the other broker works with the buyer.
In the case of two brokers being involved in the same transaction, both brokers typically
share the commission in the form of a "co-fee" or "cooperating broker
fee." This co-fee is defined in a real estate listing agreement and/or buyer agency
agreement prior to the transaction taking place, and may be regulated by the local (MLS)
Multiple Listing Service in which the brokerages participate. Because the brokers share
the transaction commission, there is no additional cost to either the buyer or seller for
using their own individual broker.
Understanding that real estate involves both a buyer
and a seller, there are always two sides to every real estate transaction.
Looking at a transaction
from the Buyer’s side:
A buyer is the person who brings the money to
the closing table. In a typical real estate transaction involving one or more brokers, the
buyer pays a total acquisition cost to buy the property. This is known as the
"gross" purchase price. The gross purchase price includes the seller’s net
proceeds and the brokerage commission. Thus, from the buyer’s point of view, the
buyer is financing both the seller’s money and the brokerage commission in a total
gross purchase price. In the case of two brokers being involved in the purchase, both
brokers get paid a piece of the agreed upon brokerage commission that is clearly defined
in the purchase and sale agreement.
Looking at a transaction
from the Seller’s side:
A seller brings the product to the closing table. In a
typical real estate transaction involving one or more brokers, the seller never actually
keeps the full amount of "gross" sales price. Instead, the seller keeps a
"net" amount after the brokerage commission is paid. Thus, from the
seller’s point of view, the seller is paying the brokerage commission from the
seller’s gross sale price. As described above, when two brokers are involved in the
purchase, both brokers get paid a piece of the agreed upon brokerage commission that is
clearly defined in the purchase and sale agreement.
No matter whether a broker works for the buyer or seller,
you can see that the question of who pays the brokerage commission is a matter of opinion
and interpretation. Most experts agree that the simplest way of looking at a real estate
brokerage transaction is by looking at it as simple arithmetic.
|
What
makes a Buyer's total purchase price: |
| Seller’s
"Net" Proceeds |
+ |
Real Estate Brokerage Commissions |
= |
Buyer’s "Gross" Acquisition Cost of Ownership |
Summary
With the majority of real estate transactions involving
professional real estate brokers, buyers should employ their own exclusive buyer agent to
assist them in locating, evaluating and negotiating real estate, without the fear of
additional fees needing to be paid for buyer brokerage services.
Remember that unless you specifically employ a broker to
work for you by signing a buyer agency employment agreement, all brokers and salespeople
represent the seller.
Consumer advocates strongly
recommend that buyers hire their own agents. They further argue that a co-fee has already
been built-in to the purchase price, and therefore, there is no need for the buyer or
seller to incur additional fees when the cooperating agent represents the buyer.
For references and to locate a reputable exclusive buyer agent
anywhere in the United States, you may call 800-983-1100 or register for information online.
