Home Buying in California>Question Details

Ogiga, Home Buyer in California

CA - Buyer Representation Agreement - Exclusive I'm confused and want to get things cleared up.

Asked by Ogiga, California Thu Aug 6, 2009

I have a question about buyer representation and people have been confusing me about it. I want to buy a particular house and a potential broker gave me "BUYER REPRESENTATION AGREEMENT - EXCLUSIVE" (like the one here: http://www.socalredsupport.com/Buyer rep agreement.pdf) contract to sign. My broker put down a number for broker compensation (paragraph 3) and I tried asking around to see if I'm getting a fair rate, but everybody has been confusing me.

The agreement states that I am obligated to pay xx% of the acquisition price . If someone else compensates the broker, that amount is credited to my obligation.

One broker tells me that compensation is completely irrelevant because the seller pays all the compensation.
Another broker tells me that the buyer doesn't pay anything and that the seller pays commission that is divided among the two brokers.

Can someone tell me what's going on? Thanks.

Help the community by answering this question:


You should see a Real Estate Attorney for an explanation / clarification of this Contract.

Once you sign it, you will [most likely] be legally bound to whatever it says.

Best wishes,
1 vote Thank Flag Link Thu Aug 6, 2009
Hello Ogiga and thanks for your post.

Let me see if I can help clear the confusion. First, both brokers are correct in asserting that the seller pays for a commission that is usually divided between both the listing agent and the selling agent. However, if this form is used AND the agents fill this out correctly, the Buyer's Representation Agreement should 1) clearly state the amount of the commission and 2) clearly state the home address for which the buyer and agent are working to acquire.

In most cases, our MLS here in Calfiornia shows how much the buyer's agent (also called the "selling agent") will receive as a commission. Typically, up here in Northern California, the amount is between usually between 2.5 and 3% of the selling pricing. As with all transactions, commissions are negotiable for both the buyer and the seller, so if you want to pay your agent only, say, 2.5% of the sales price rather than 3 percent, then so specify on the contract. In Paragraph 4 of the contract, it states that if the commission is paid by someone other than the buyer (for example, the broker), then the broker is obligated to tell you if the commission is greater than your agreed upon 2.5% and is allowed to keep the overage (if no boxes are checked in Paragraph 4) or must refund the difference to you, as the buyer.

So, for example, when I work as a Facilitator/Realtor who gets paid 1% on the sale of a home, my buyer clients are "refunded" the difference between the 1% commission I agree to accept and the amount that is actually paid to my broker. Otherwise, if I'm working as a full-service Realtor, and my fee is 2.5%, then the commission paid to me would be 2.5% on the sale price. If the commission paid to the Realtor is 2.5% then no money would be refunded to the buyer, but if it is 3% then the buyer gets 0.5% or any funds above the agreed upon 2.5%.

Hopefully, this makes some sense to you. If you have any questions about the amount of the commission, ask the agent to show you how much the seller is offering to the buying agent to bring a buyer. Because a Buyer Representation Agreement is a contract, it's always better to fill in the blanks properly with the correct information rather than "assume" that the understanding is known. You are within your rights to ask, and it makes good sense to be clear especially when it comes to legal contracts.

Good luck!!

Grace Morioka, SRES, ePro
Area Pro Realty
San Jose, CA
0 votes Thank Flag Link Wed Aug 12, 2009
This is what you call double dipping, The broker want to get pay from you and from the seller. I most case, the buyer agreement will come into affect when you want a broker to go to bat for you for a foreclosure, Shortsale or Bank own at dirt cheap price.
You should understand, the prices I see houses going for now, by the time the closing is done, it was not worth it as an agent, to sell that property. Maybee you wanted a home at dirt cheap price, expect the broker to bust he/her backside for you, for nothing. Welcome to the real world, we feed our family by selling, not charity works. So who ever broker is out there telling you the seller pay all commisions, they half right. Buyer and seller can pay, depend on the deal you made with the agent or the broker, when you want them to search for dirt cheap houses for you.
0 votes Thank Flag Link Wed Aug 12, 2009
an exclusive buyer agency is a contract between you and your buyer agent. In almost every case the seller has signed the listing with an agreed apon commission, either a dollar amount ar a percentage of the "sale" price not the listing price. The buyer agent will work in your best interest to see you get the things you want for an affordable price to you. Once you have made your offer on paper and your agent has submitted it to the sellers to look at, she will go over the offer with them and suggest any changes she thinks should be made. You will recieve a counter offer. you buyer agent will present this to you and discuss the pros and con to the counter. you will have a period of time to think about it and can then make a counter on there counter or you can accept there counter as written. Many things will need to be done to get your home to the closing usually within one month or less. If you get this far or even close to this point and then decide to change your mind, then you the buyer could owe for several things it has taken to get the loan to this point. otherwise if you get to the closing with your nervous self, hoping your doing the right thing (buyers remorse starts to set in at this point...what have I done?) but once there and the papers are signed, the title company puts all the paperwork togather including the buyer and seller agents pay checks. it comes from the proceeds of the sale. The buyer pays no part of that. Any money the buyer has paid in an earnest deposite is applied to his loan as a credit. Now if you want to have inspections done after your offer has been accepted you will have written that into you purchase agreement, and you will have ten days to inspect and do a general look over (you may also ask the seller to contribute to the cost, it doesn't hurt to ask). If things seem good in that ten day time you don't need to say anything. It will be assumed that you are accepting the house in the present condition. If you find a problem you must put it in writing and either decline your offer with your reason (and will recieve you earnest money back) or you can just plan on doing whatever work needs to be done.
Another time a buyer may pay for an agents commission is if they find a for sale by owner. First your agent will try to get the sellers to agree to pay the or at least a portion. Normally the seller wants the house sold and the few dollars it would cost would be very worh it to them. the buyer agent at that time would be taking on the listing,so to speak. they would have to see that all works out for the best for their buyer which most often means doing all the work for the seller also, and believe me, there is plenty of work and investigating to do!!! Good luck to you, find an agent that you trust and you feel comfortable with, and then go for it!!
If I can help or answer any questions for you please feel free to call
Melody Bell
0 votes Thank Flag Link Thu Aug 6, 2009
Most of the time when you buy a property listed on the local MLS, there is a Buyer Broker Compensation.
Let’s think that the Buyers Broker compensation is 2%. Therefore, your broker will get 2% of the selling price or the price agrees to get compensation. You contract established that you will pay a compensation of 3%. Then, you are obligated by contract to pay the 1% left.
If the Buyers Broker Comp is 3% and your contract say 3%, then you ought them nothing. And so on.
Some agents do this just in case the buyer ends up buying a For Sale by Owner and the seller does not want to compensate the Buyers Broker at all.
Too bad you did not get an explanation.
This is how it will happened in Minnesota. I hope CA is the same.
0 votes Thank Flag Link Thu Aug 6, 2009
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