Home Buying in 19150>Question Details

Heather, Home Buyer in Cedarbrook/Stenton,...

IS THERE A FEE CHARGED TO THE BUYER BY THE REALESTATE AGENT TO FIND A HOME?

Asked by Heather, Cedarbrook/Stenton, Philadelphia, PA Thu Jan 13, 2011

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You should not be charged a fee, the buyers agent is paid from the commission offered by the seller.

Good Luck,

Lesley Barbosa, ABR, SFR
Lbarbosa@weichert.com
215 767 7433
0 votes Thank Flag Link Thu Jan 13, 2011
Hi Heather,

There seems to be much discussion about who owes the fees to the buyers real estate broker when the buyer chooses to purchase a house. Perhaps a little history is needed to put the answer in perspective.

Until the early 1990s, buyers were not represented by real estate agents in the purchase of real estate. You could call a real estate agent and ask him to help you buy a house. The agent might drive you around and show you several homes from which to choose. Perhaps the agent will help you determine value of homes or even help you craft and submit an offer. However, that agent did not represent you. The agent was actually working for and representing the seller in the real estate transaction through an arrangement called seller sub-agency. The agent had no fiduciary obligation to you. Those fiduciary obligations include obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care (OLDCAR). In fact, the agent owed those responsibilities to the seller. The agent was forbidden from sharing information about the seller with you, yet he was free, if not obligated, to provide information about you to the seller that perhaps you would not necessarily want shared. Buyers began to complain about the inequity and unfairness of this arrangement. The trend began to shift to buyer agency arrangements where buyers could enter into the same types of fiduciary relationships as the seller's with their agents. Seller sub-agency has all but disappeared in Pennsylvania.

Today, most buyer agents will insist on a defined buyer agency relationship with their buyer clients. At the minimum, when you are in an agency relationship with your real estate professional, your agent is obligated to provide the aforementioned fiduciary responsibilities. Many buyer agents will also offer a value proposition that might include other services. In exchange for these services, the buyer agent may specify a minimum fee to their buyer clients. The fee is usually a percentage of the purchase price of the real estate and the fee is to be paid at settlement or transfer of title. There may also be an additional minimal fee that a buyer might be responsible to pay to cover some of the administrative tasks performed by the buyer's broker. This fee is usually represented as a flat fee commission.

The seller, through their agreement with their own real estate agent who has listed the house, will agree to pay a commission to their agent. The listing agent may share a portion of that commission with the buyer's agent. The buyer's agent will apply that share of the commission to the fee owed by the buyer. Most often, that share will adequately cover all or most of the buyer's fee obligation to his agent. In those cases where the share of the commission does not adequately cover the buyers obligation, the buyer may be responsible to cover the shortfall between the shared commission and the fee they agreed to pay.

There are many ways that you and your buyer agent can negotiate how the shortfall will be paid (or waived) and you should discuss that with candidate buyer agents who are competing for your business. But, at the end of the day, you will need to decide whether you wish to complete the a specific real estate purchase transaction based on the costs associated with the transaction. Real Estate licensees are obligated by law to provide an estimate of costs associated with a transaction so the buyer understands their financial obligation in advance of making an offer.

When a buyer is selecting someone to represent them in a real estate transaction, they should consider this: Once the agency agreement is signed, the agent is ethically and legally responsible to provide those fiduciary responsibilities stated above. Those fiduciary responsibilities are very important but buyers should also consider the value their real estate agent will provide based on the agents value proposition.

The real estate industry is very competitive and like most things, you usually get what you pay for. There are no set industry fees for services so a consumer must carefully weigh the value of the services offered against the their costs.

In summary, if you enter a buyer agency agreement with a real estate licensee, the terms of that agreement will most likely require you to pay a fee. In most cases that fee or a substantial portion of it will be paid the listing agent but you should be aware of who is paying the fee to your buyer agent with each and every offer you make.

I hope that information is useful and helpful. I wish you the best of luck in your search and ultimate purchase of your new home.

Joe Sheehan
Keller Williams Real Estate
Exton, PA 19341
Office: (610) 363-8444
Mobile: (484) 948-0936
jsheehan@josephsheehan.com
3 votes Thank Flag Link Thu Jan 13, 2011
Yes, agreed with Tony on the "Brokerage fee" or "Transaction fee" that is sometimes charged and must be disclosed within the Buyers agreement package. ( this does Not compensate the Agent)

All fee's, commissions, etc. paid to an Agent must be fully disclosed in writing and paid to the agents Broker upon execution or fulfilment of the contract. These fee's (compensation) shall then be dispersed (paid) to the Agent by His/Her Broker. No compensation shall take place void of the Broker...
2 votes Thank Flag Link Thu Jan 13, 2011
In addition to the commission they receive from the listing broker , many agents charge an admin fee or flat fee which is a fee that they are being charged by their brokerage and they are passing along. It should be agreed upon when the buyer/broker agency agreement is entered into.
2 votes Thank Flag Link Thu Jan 13, 2011
Yes. But who pays the fee depends on your contract with the agent. Traditionally, the buyers agent fee comes from the total commission offered by a seller. The buyer pays it - but only in the sense that a fair market value includes a consideration of a fair market commission to make the transaction possible, and have both parties properly represented. In rare cases (though getting more common) some brokerages are resorting to "fee for service". That means you will pay your agent a predetermined rate for the hours put into finding a home, negotiating the deal and doing all the steps involved with closing. If the seller does offer a commission, your "bill" could be adjusted against the commission received from the seller. It could be more, or it could be less. Again, though, that's rare. Sometimes it occurs if, for example, you want an agent to help you purchase a home for sale by owner where no particular commission has been offered by the seller. But in most cases, the buyer's agent's commission will be paid out of the seller's proceeds at close of escrow based on a percentage of the purchase price that was advertised in the Multiple Listing Service.
1 vote Thank Flag Link Thu Jan 13, 2011
For the most part, no. The Buyer's Agent will be paid from the commissions the seller paid in listing their home. Yet there could be a couple of ways for the buyer to paid "extra" for the services.

First, when you contract an agent, you agree that the agent (their broker really) will either get "x%" as commission from the sale. Let's say this number is 2.5%. If he shows you a home, which you end up buying, where your agent (broker) would get 2%, you would then owe the other .5% IF your agent pushes the issue. Most will not.

The other way is that when you contract an agent, they may charge you a fee which would be collected up front and would in most cases be taken off from the commission collected from the sellers side. In other words, it would show as a credit to you upon the purchase of the home.
1 vote Thank Flag Link Thu Jan 13, 2011
I just bought the house and paid that fee. I was not aware of flat rate commission, till four days left in settlement. Agent never talks about it but had my signature on last page (no initial on other pages even she changed some stuff on them by hand). So weichert charged $345 to me and also got commission from seller. I will never go back to weichert in future and will never recommend anyone to them.They will almost force you to offer high (so they can get more commission). Looks like no professionalism and no ethics. If you are buyer they will till you market is going up, but if are seller they will tell you market is going down. May be not all weichert agents are same, but the one i got was worse.i dont know when weichert start charging that flat rate commission.
0 votes Thank Flag Link Sun May 22, 2011
The real estate fee is in the sellers cost unless you buy a for sale by owener
0 votes Thank Flag Link Sun May 22, 2011
Weichert charges $345 flat rate commission to buyers. Their contract have three pages, this flat rate commission is on second page. Agent will talk about first and third page and will get your signature. When your settlement date come they will told you to add that charges. So you cannot do anything. And they will show you the contract you signed. Your signature will be on last page only. They should have initial on all pages, but who cares. Anyway you are not buying home every day. So they don’t care if you will not use their services in future.
0 votes Thank Flag Link Sun May 22, 2011
When you enter a business relationship you should discuss this. When a seller is represented by another broker usually the compensation is paid by the sellers broker. You need to clarify if you are paying a "broker services" fee from 100-250ish. It's often required by some brokerages. Your buyer agency agreement needs to expressly state if you pay any fees.
0 votes Thank Flag Link Wed Jan 26, 2011
All fees are negotiable. Some buyer's agents do in fact charge their buyers a fee.
Each agent can only answer for himself or herself, not for all of us.
0 votes Thank Flag Link Tue Jan 18, 2011
Heather,
A buyers agent does now collect a commission typically from the buyer. It is usually paid by the seller when a home settles. Some companies charge a flat fee commission or a conveyancing fee when the home settles and it is charged as a part of the closing costs. It can range from 250-650.00 depending on the company.
Hope this helps and good luck finding a home.

Carmel Archdekin
Coldwell Banker Preferred
223-225 Market Street
Philadelphia PA 19106
215.680.5998
0 votes Thank Flag Link Mon Jan 17, 2011
There should not be. Your Buyer's agent will be paid from the seller side of the transaction. Your agent should explain this on your first face to face meeting and if he or she does not ask them up front how they will be paid. This is a good question and a common misconception among home-buyers.
Jason Ottmann
Prudential Hodrick Realty
Danville, PA 17821
570-275-7696
0 votes Thank Flag Link Thu Jan 13, 2011
Heather,
There is a Transaction fee and other Settlement Charges based on your purchase. However, I recently heard some Agents are charging a fee to go around and look at homes. I heard one firm charges an hourly fee. Thats NUTS,
The short answer from me is NO. I will qualify you to purchase, send you up to date Listing info that fits your criteria, show you the homes you choose to see, walk you through the whole process from purchase to settlement with NO up front fees. And questions are always free. :)
0 votes Thank Flag Link Thu Jan 13, 2011
On the settlement statement, any Realtor commission will show as paid by the seller

There will be no upfront cost either
0 votes Thank Flag Link Thu Jan 13, 2011
Realtors all have a different business practice HOWEVER the norm is they are paid at closing by the seller. Some Realtors could charge minimum fee reimbursed at closing show properties for fact it can be expensive when the buyer decides NOT PURCHASE A HOME Realtor lost the expense of time, gas, spent 40 -100 hours working with a client.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Thu Jan 13, 2011
Except in special circumstances (like purchasing a For-Sale-By-Owner that refuses to pay the Realtor's commission), there is no out-of-pocket expense to the buyer to use a buyer's agent.

The buyer's agent is paid from the seller's proceeds at closing.
0 votes Thank Flag Link Thu Jan 13, 2011
Alan May, Real Estate Pro in 60201
MVP'08
Contact
It depends on your afreement with the agent and his broker. In a typical sale, the seller puts his house on the market, hires a realtor to represent him and offers part of the commission to other realtors who may bring him a buyer. That is called an offer of broker cooperation and in that situation the seller pays both his own realtor and the realtor who represents teh buyer. However, there is also something called exclusive buyer agency, where the buyer agrees to pay the realtor. It gives the realtor great flexibility in that it permits the realtor to explore for sale by owner properties and preview them, etc, for the buyer as well as to act as their agent throughout the purchase process, which is extensive antd sometimes confusing. Often a realtor will ask a buyer to pay them a percentage of the purchase price for their services and will give the buyer a credit equal to whatever the seller will or has agreed to pay. It's actually not a bad idea if you need someone to do the leg work for you. Investors often use this tool so that they have realtors constantly looking for deals to bring them.
0 votes Thank Flag Link Thu Jan 13, 2011
In most cases, no. But I would ask before you hire one just to be sure.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Thu Jan 13, 2011
You should interview three agents in your area. Ask them how they expect to be paid and read their buyer agent contract if they have buyer agency in your State.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Thu Jan 13, 2011
Hi Heather,

Typically the seller of a home contracts with a brokerage for a certain amount of commission to sell their home, and that broker shares the commission with the broker for the buyer. However, some agents will charge a small amount to the buyer in addition to the seller paid commission, which is paid at closing. This must be disclosed on the agreement you sign with your buyer agent.

You should also inquire about special situations - for example, if your agent helps you find a home that is for sale by the owner - if you will be charged any commission.

Good luck house hunting! -Meg
Web Reference: http://hambergteam.com/
0 votes Thank Flag Link Thu Jan 13, 2011
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