Something not touched on by the other answers is agency. If you don't sign an exclusive right to represent buyer agreement with your agent (and guarantee a commission), the agent defaults to representing the seller!

If you'd rather have an agent represent your interests, I'd say pay them and pay them well.

Typically, the busier an agent is the better that they are and the more that they charge. Personally, I rarely work for less than 3% plus $345.

As the other answers note, the "guarantee" itself, as well as the percentage, is negotiable. However, also as pointed out below, in 99% of the cases that'd still mean you'd pay nothing out of pocket. Most listed properties have a sufficient commission agree to to cover the 2.5% commission (or more). And most, though not all, FSBOs, are willing to pay a commission if a Realtor is responsible for finding a buyer. Further, you can direct your Realtor to search for and identify only homes in which the commission will clearly be paid by the seller. I wouldn't recommend that, but you could do that if you wished.

Hi Maude,

These things are always negotiable and there is nothing "typical" (we are not allowed to say anything is typical because of fair trade laws). But in my opinion, what you have described sounds reasonable. I have heard some agents in this area guarantee a 3% commission, some do 2.5% and some do 2%, etc. Ultimately, you are hiring an agent and you would be responsible to pay them for the work that they do for you if the listing brokerage doesn't share a reasonable wage with them.

For a full-time agent who depends on commission income for his/her livelihood, it is important to know what you will be paid for your work prior to commencing the work. Not doing this would be like, for example, a barber not knowing what he will get paid until after the haircut is over.

Practically speaking, what would this particular guarantee mean for you? It really depends on what you are buying. On bank-owned properties, commissions are usually at or above your guarantee. But if you are looking at a bank-owned property above $400K or so, sometimes it is 2% (in which case you would pay you agent 0.5% for their services). Sometimes commissions are lower than your guarantee on short sales as well. For a regular-owned property, commissions are very rarely below your guarantee. On new construction, I have never seen lower than your guarantee. Even most for sale by owners are willing to pay a buyer's agent more than your minimum guarantee.

I think your agent is trying to come up with a guarantee that would not involve you paying some of the commission 99% of the time. If you would like numbers to make you feel more comfortable, you can ask your agent to show you the commissions on a random selection of properties in your area of interest.

As far as the $300, you did not mention what this was. If it is an admin fee, you could ask your agent to pay it for you out of their commission and see if they are willing to do so. I know the concept of the admin fee is under review by HUD. This is a fee that goes directly to the broker and I know a lot of agents disagree with charging their clients this fee. Some agents will always pay this to their broker out of their own commission.

The bottom line is, I hope that you are working with an agent that will do a good job for you and that you feel deserves to be paid for their efforts. If you have any doubts about the agent and would like to switch agents, your prior agent will not get paid anything so its better to switch early rather than after he/she has done a lot of work for you.

Thanks,
Sonal

Maude,

That question is important.....what if you decide to purchase a For Sale By Owner home?
Some FSBO do not want to pay commission to the buyer's agent.

What if one day you decide not to be so nice/ethical and go directly to the listing agent, as some buyers do because they falsely believe that they will get a better deal?

A listing agent, by law, represents the Seller and cannot give a Buyer an advice or do anything that would harm financial interests of the Seller, yet some Buyers assume they can pull it off on their own, without their buyer agent to represent them...which is perfectly fine, in the absence of any written agreement it is the buyer's legal right.

HOWEVER, it is also an agent's right to protect themselves from these kind of situations by putting all the terms of the Buyer Representation on the table at the very beginning of the process.

Wouldn't you do the same, if you were your agent?

If you want to make sure that the agent is working for YOU and has your best interest instead of their financial goals, then yes it is a good idea to guarantee that they get paid.

Please take some time and look through the following threads: http://www.trulia.com/voices/Home_Buying/Where_can_I_find_ou…
http://www.trulia.com/voices/Home_Selling/Can_low_commission…
If it is important for your agent to show you all the homes available instead of just the higher paid commission ones then you have a good deal.

I've seen this a lot. The agent wants to make sure they get paid for all the weeks and months they spend showing homes to a buyer. Typically the seller will pick up this commission, but if there is any difference in commission, like the seller will only pay 2% then the buyer must make up the difference. It is not unheard of in the current market. The agent wants to make sure you do not go over their head and employ other agents. Find one agent, stick to them for ALL showings and if it doesn't work out, identify it early in the game. You can ask your agent to let the agreement expire in 2 weeks as a sort of trail period and then renew for a longer time before you can trust them that they will do a good job.

I don't know the situation, but the admin fee of $300 may be something that the real estate company takes. At my Keller Williams office, they do not force an admin fee. It is up to the agent. At other offices, if the fee is not paid by the buyer then the agent eats the fee. I can't' make one general statement about anything and my jurisdiction is DC, MD and VA. My team is distressed sale focused and very up on the market.

Hope that helps. Everthing is my opinion and not gaurenteed. It is up to you to do the hoemork on the biggest purchase of your life.

Susan Cook,REO Default Certified Professional
Licensed Broker in VA, MD & DC
REOTrans Platunium Certified

Jorge Guillen, Short Sale Expert, Realtor
Home Retention Consultant

http://www.NovaHomeSavers.com

Keller Williams Alexandria-Kingstowne
703.562.1760 Office
703.940.1064 Fax
571.225.5609 cell
http://www.linkedin.com/in/metroforeclosures
twitter: @metro4closures

There are no rules for buyer agent commissions. If you choose to sign a brokerage agreement with an agency, the commission arrangement must be disclosed. The listing agreement with the seller, determines the amount that the seller is willing to pay a buyer agent. Some buyer’s agents want to protect themselves in the event they show a home with unusually low commissions being offered. They may then ask the buyer to pay the difference between the seller's commission offering and their minimum. If it can not be worked out, find a new agent that will work with you. Complete honesty and open communication from both you and your agent should prevent most any difficult situation from arising. Good Luck!

Just like Eve said, commission is negotiable. In our (Virginia) buyer agency agreements, it states that the buyer is responsible for the commission. When we write up an agreement with our buyers, we do not charge them any fees for our services. To make sure that this is understood, we add "3% or as offered in MRIS" This does two things...sometimes the compensation is higher, and sometimes it is lower, and it states that the compensation offered by the seller is what we will receive as compensation. The additional $300 is probably an admin fee that some agents charge to their clients. This covers some of the costs that their office may charge to them for processing the paperwork. To cover yourself, I would ask for your representative to add language that removes the commission responsibilities from you to the seller. If they are unwilling to do that...then find a new agent. They don't work for you unless the buyer agency agreement is signed by their broker.

Jimmy Mulhern
RE/MAX Premier
jamesmulhern@remax.net

All commission is always negotiable. Buyer's Agent Commission is posted in the Multiple Listing System--in our area MRIS, and is determined by the Listing Agreement. Your Buyer Broker Agreement determines what the commission will be regardless of what is posted in the MRIS. So, if the commission on a listing is 3% presumably you would owe your agent nothing. You could ask your agent to accept whatever is posted in the MRIS. To make this acceptable to your agent you can do your part by getting pre-qualified, focusing on property that is in your price range and being serious about the process.

Good luck!

Eve Thompson
REALTOR
Long and Foster
703-582-6475
eve.thompson@longandfoster.com
Twitter: @EveMT