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Cq, Home Buyer in Seattle, WA

I just previewed the Buyers Agency Agreement and I wanted to know: Is paying the broker 3% of the purchase

Asked by Cq, Seattle, WA Tue Apr 22, 2008

price of the property and 3% of the acquisition price of the property a standard practice?

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I have to strongly disagree with this statement:

"It's a standard clause in a buyer agency agreement that you'll pay 3% to your agent IF the seller doesn't pay it. "

I'm sure the commission is a blank to be filled in and the NWMLS would not make an absolute percentage par of the "standard" language.

While I don't readily use buyer agency agreements, I don't think it's possible for any standard form to include a set commission amount.
1 vote Thank Flag Link Thu Jul 3, 2008
We charge $1995 and rebate the rest of the commission back to our customers. If they need more than 3 showings we reduce the rebate that they receive by another $1995 and give them unlimited showings and offers.
In general the 3% is a standard practice by most realtors.
Web Reference: http://www.shopprop.com
1 vote Thank Flag Link Sat May 3, 2008
There are many different buyer agency agreements out there.
I am assuming that you have been given one of the pre-printed forms from the NWMLS or a specific company form.
Odds are it is the form 41A, In which case the buyer is agreeing to pay the broker/buyers agent 3% of the sales price on the home that they purchase.
Typically the listing agent has an agreement with the seller to split their 6% commission with any co-broker/ or buyers agent, thereby, according to the contract, eliminating the commission due from the buyer. In that type of contract the buyer may have to pay an amount if the listed buyers’ agent commission is less than 3% or if your agent finds a FSBO and the seller doesn't agree to pay the commission. I hope this helps.
You should also be given Law of Real Estate Agency Pamphlet (Rev. 1/98) which will describe in detail the different types of agency in relationship to you as a buyer.
1 vote Thank Flag Link Tue Apr 22, 2008
The commission is paid by the seller per the listing agreement with the listing agent. The listing agent agrees to share the commission with the selling agent. The selling agent is the broker who represents you as a buyer. As a buyer there should be no direct commissions paid by you. Buyer broker agreements can place you on the hook for the commission under certain circumstances that are usually spelled out in the agreement. As a buyer I would make sure I read the agreement carefully before signing it.

Most brokers representing a buyer do not have them sign the buyer broker agreement.

If you have further questions, I'd be happy to discuss them with you.

Brett

Brett Frosaker
Broker
Columbia Real Estate Group
206-755-7858
bfrosaker@columbia-re.com
0 votes Thank Flag Link Mon Sep 6, 2010
Commissions are negotiable - always. There can't be a standard pre-printed number, but it is up to you and your agent to negotiate what that fee is.
Web Reference: http://www.cooperjacobs.com
0 votes Thank Flag Link Wed Sep 2, 2009
Typically, the commission (which is usually 6% divided between Buyer and Seller's agents) is paid at closing by the Seller. Therefore, the commissions are reflected in the purchase price. There is generally no out-of-pocket expense for the Buyer in terms of his/her agent's commission. I am not sure that there is a distinction between "acquisition price" and "purchase price," though the responsibility is with the Seller regardless. It is important to note, however, that this is, in a certain sense, a technicality, given that the commission is factored into the price. Even though the Buyer's agent's commissioin (Selling Office Commission) is subsequently deducted from the Seller's proceeds, it could be argued that it is, in a sense, a premium paid by the Buyer. Either way, it is considered to be part of the purchase price, as opposed to Title and Escrow fees and loan origination fees, which are tacked on at closing.
0 votes Thank Flag Link Wed Sep 2, 2009
Actually, there legally can be no "standard" commission amount. However, most homes seem to be at 3% for the selling agent, with 3% for the listing agent (total 6%). I do a lot of work in Kirkland in the 1.5-3 million dollar price range and the selling agent commission is still 3%.

In a market so crowded with inventory I am utterly amazed when I see people still trying to offer 2% or 2.5% in an effort to save a few bucks.
0 votes Thank Flag Link Thu May 29, 2008
In Seattle the most common commission under 1 million dollars is 6% split 50/50 to the listing broker and the selling broker. Then the agent gets a split of that depending on what type of agreement he/she has with the broker. Over 1 million and the average is 5% split.
0 votes Thank Flag Link Thu May 29, 2008
It's a standard clause in a buyer agency agreement that you'll pay 3% to your agent IF the seller doesn't pay it. Most sellers have already agreed to pay this 3% to your agent so it's a moot point. This clause is designed mainly to protect your agent if you choose a house where the listing agent is paying less than 3% or if it's a FSBO or, and this is very common: If you're using more than one agent or decide to approach a seller directly and try to circumvent your agent.
0 votes Thank Flag Link Fri May 23, 2008
The Buyer's Agency Agreement.... typically the seller pays the commission to the agent, not the buyer. Unless you are buying a for sale by owner property the paying of the commission would not apply to you. Check with your agent or attorney and have them explain the addendum to you prior to signing it.
0 votes Thank Flag Link Thu May 22, 2008
All commission is negotiable. Even if you are a buyer. The typical is 6 % 3% for the selling agent and 3% for the buyers agent. But that is not always the case.
With the way the market has slowed down some there are special incentives that sellers are offering to buyers, and buyers agents. For example: Trips, buyer bonuses, even cars. If an agent is getting something other then a typical commission 3-4% or any bonuses, this needs to be disclosed to the buyer.
The buyer needs to be aware that there are special bonuses that the agent is getting. A good agent will also explain any bonuses that they are getting.

So what it boils down to is if you sign the mls buyers agreement and you say yes to a 3% commission that you will pay. If your agent showes you a property like new construction and they only offer 1.5% commission then the agent could ask you to pay the diffrence. So it is good to say on the agreement that the agent will only get what the seller is offering you and you are not responsible for anything else.
0 votes Thank Flag Link Wed May 7, 2008
Hi Cq -
3% is generally what I charge my buyers unless there are some special circumstances. Commission is absolutely negotiable. I am always willing to talk to buyers and sellers to see what their situation is.

Your buyers agency agreement should also have other terms like length and scope - make sure to look at each one of these to be sure that they apply to your specific situation.

Good luck!
0 votes Thank Flag Link Wed Apr 30, 2008
Cq, If there is anything on the agreement you are not comfortable with, feel free to have a conversation with your agent about it. The comission is typical and is payed for by the seller for most properties. The agreement for buyers usually stipulates that if you find a home where the seller is not represented, such as a FSBO, and the seller has not agreed to pay a buyers agent a comission, that the buyer is then required to pay the comission. But your agent should also negotiate with the seller to try to get them to pay it first.
Personally I have never used a buyers agreement for this reason. I think it scares clients and raisies concerns just like this.
0 votes Thank Flag Link Wed Apr 30, 2008
Everything is negotialble!
0 votes Thank Flag Link Wed Apr 23, 2008
Agency may vary state to state. In MN the rate is somewhat lower but remember you can negotiate this %. Also most consumers and real estate agents do not realize that if you purchase one of this brokers listings then say if they have a 8% commission that was to be split between buyers and sellers agents you would only have the 3%. Thus this contract should have "up to 8%" or whatever the top % rate is in your area.
0 votes Thank Flag Link Wed Apr 23, 2008
Generally speaking, 3% would be the highest negotiation between a buyer and an agent. If the seller offers more than 3%, then you would get a cedit for the difference.

You need to ask what happens if the house you pick is offering less than 3%.

As to "standard practice", all commission are negotiable and there is not supposed to be a "standard" fee. It depends on the sale price. At $250,000, 3% is reasonable IMO. At $900,000 it is not. Look at the dollars and "sense" and not just the percentage.
0 votes Thank Flag Link Wed Apr 23, 2008
In Colorado, I see you are in Seattle, we have a flat 2.8% commission on the Buyer's end. This is paid by the seller in the listing commission. A builder or for incentive a seller will offer a higher commission if they want more showings by Realtor's.
0 votes Thank Flag Link Tue Apr 22, 2008
Typically, the commission (which is usually 6% divided between Buyer and Seller's agents) is paid at closing by the Seller. Therefore, the commissions are reflected in the purchase price. There is generally no out-of-pocket expense for the Buyer in terms of his/her agent's commission. I am not sure that there is a distinction between "acquisition price" and "purchase price," though the responsibility is with the Seller regardless. It is important to note, however, that this is, in a certain sense, a technicality, given that the commission is factored into the price. Even though the Buyer's agent's commissioin (Selling Office Commission) is subsequently deducted from the Seller's proceeds, it could be argued that it is, in a sense, a premium paid by the Buyer. Either way, it is considered to be part of the purchase price, as opposed to Title and Escrow fees and loan origination fees, which are tacked on at closing.

I hope that helps...
0 votes Thank Flag Link Tue Apr 22, 2008
Hi Cq,

Assuming that the acquisition price and the purchase price are the same thing then, yes, 3% of the purchase price is the industry standard paid by the seller for low to upper mid priced homes in Seattle. However there are some exceptions especially if you are looking at homes outside of the Seattle area where commissions ranging around 2.5% are more common.

If the agent is using the Northwest MLS Buyer Agency Form 41A, there is no reference to "acquisition price" in that document. It refers only to the commission which is based on the sale price (puchase price). Depending on what the agent writes in to that document would indicate if, and what amount, the buyer would be liable to pay buyer agent if the seller was not paying a full 3% commission to the buyer agent.

If the agent is using a document other than the form 41A, I would need to know more specifics on the phrasing.
Web Reference: http://www.homehounds.com
0 votes Thank Flag Link Tue Apr 22, 2008
Cq,

Buyers rarely will actually pay any commission to a broker. However that being said there is still a chance that you may have to pay something when you do sign a buyers agency agreement. The commission is usually paid by the seller at closing. However if the seller were only to pay 2.5% or 2% then you would have to pay that difference at closing.

In other words if the Sales office commission was 2.5% and you greed to the standard 3%, you would be liable to pay your agent the difference of 0.5%. I personally have never seen a Buyers Agency agreement that cost an additional percentage on top of what they are getting from the Sellers.

Hope this clarifies things better for you. Best wishes in your housing search.
Web Reference: http://www.homelantern.com
0 votes Thank Flag Link Tue Apr 22, 2008
There are numerous Buyer's Agency Agreements that are being used in the NWMLS. I don't know which one you're looking at but they all have a clause that states any commission paid by seller will be credited to the buyer's commission obligation. Generally, this means that buyers rarely pay any commission at all. A 3% selling office commission is reasonable in this market. You can instruct your agent to request that the seller pay this full amount in those instances that the published MLS commission rate is less than 3% and most sellers would be happy to do it. There are not two separate commission fees. The agreement you're looking at may simply be restating the one fee in two different ways for clarity.
0 votes Thank Flag Link Tue Apr 22, 2008
Some agents are now using Buyers Agency Agreement to talk to buyers about how we as agents get paid. If your agent is bringing this up with you it could be because he/she is wanting to make sure they get the full buyer's commission. This may be because you have brought up working with other agents, you could have asked them about for sale by owners, etc. If agents are going to work with you and spend their time to show you homes, they want to make sure that the end result of that is they get paid for their efforts.

Some agents regardless of who they work with require that this agreement be signed. Three percent of the sales price of the home is the usual commission that the buyer's agent receives as a part of the sale.
0 votes Thank Flag Link Tue Apr 22, 2008
I think from a buyers perspective on an agency agreement it is very important to read the detail in regard to this matter. If for example you were buying a FSBO you would as the buyer be paying the commission of your Realtor..typically 3% However, if you are doing a standard MLS property you would be paying zero dollars as a buyer for the commission as the seller is paying the cooperative brokers commission.
When you agree to a buyers agency agreement make sure that you are comfortable with the terms and ask your Realtor to explain all the facts.
Good Luck
0 votes Thank Flag Link Tue Apr 22, 2008
In our market (Georgia) the Seller pays the Commission, not the Buyer. The only time a Buyer would pay would be if they purchased a For Sale By Owner and the agent found it for the Buyer. Hope this helps.
0 votes Thank Flag Link Tue Apr 22, 2008
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