Home Buying in Austin>Question Details

 Wjhmckinney, Real Estate Pro in Austin, TX

My realtor is charging me out of pocket.

Asked by Wjhmckinney, Austin, TX Mon Dec 9, 2013

My realtor said she's only getting 2.5% for some reason, and is charging me .05% at closing that I'm paying out of pocket. Is this normal?

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Art DePaul’s answer
The amount of success fee or commision has no standing unless a contract was signed or you agreed to an amount or % of the sale. I have seen Listing Brokers offer 1/2% of the selling price as the cooperation fee payable to the Buyer Agent at the closing. The Broker or agent is a professional he/she should have had a written contract or at minimun to disclose what the Buyer BrokerFee expected. Nonetheless, it would be in fairness to pay an out of pocket expense if the Buyer Broker paid for a smoke /CO2 certificate or the home inspector for the buyer prior to closing. I would not be typicalif the Buyer Broker wants gas money. The amount paid for a Buyer Broker is known and displayed right in the MLS which typically only Brokers and their agents can see. Talk with the agents Broker or consult with your counsel.
0 votes Thank Flag Link Sun May 25, 2014
Thanks for the replies everyone, examined it from many angles and everything is on the up and up.
2 votes Thank Flag Link Sat Dec 14, 2013
Lowell Sterling's response is not accurate or make sense. It might be wise for him to focus on talking about lending and not real estate as it only confuses the consumer. It has nothing to do with the "initial contract" assuming that term is referring to a listing agreement. The listing agreement is between the seller and the listing agent. It is a negotiated fee. Also, an agent stated earlier that if the commission was less than "full standard commissions" your agent should not have shown the property. That is unethical. The realtor fee is a negotiated one. It can be variable or flat.

It IS normal for a realtor to discuss fees as part of the contract - whether listing or buyer representation. Fees can be paid in many different ways - whether a percentage of sale, hourly, per property, by the mile and so on. Some sellers offer fees to the listing agent that may be less than what may be often expected. Sometimes more. In turn, the listing agent may pass that negotiated factor on to the buying agent who then explains it to you. Each circumstance is different. Texas does not have "standard" fees.

Consider the investment of time and effort your representative has made on your behalf. Have they provided a valuable service? What other negotiated factors did they find in your favor to save you money in the final agreed upon sale? Are they assisting you with lending, home inspection, warranties, utilities, moving, communicating on your behalf with other services? What marketing materials have they provided with this property and any other to give you the confidence of making a wise decision. .05% may not be so much when you realize that we are only paid at close of sale -- everything beforehand has been free: the hours involved in researching, the time communicating with other people involved in the transaction, the gas spent on driving from one property to another, et cetera.

I hope enlightening you will provide a confident decision. And congratulations on your purchase.

Laura McMillan
Avalar Austin
2 votes Thank Flag Link Mon Dec 9, 2013
Most of Lowell's responses are cut & paste
Flag Mon Dec 9, 2013
For some reason?
They didn't explain the reason?

What does your agreement say?
What does your realtor's boss say?
1 vote Thank Flag Link Mon Dec 9, 2013
I would suggest you to call ABOR (Austin Board of Realtors) and they can help you with questions you may have.
0 votes Thank Flag Link Fri Dec 20, 2013
Typically when you sign a buyer's representation agreement the agent fee is 3%. If sellers (typically short sale) pay less than that your agent can collect from the remaining from you. It doesn't happen often but it can happen. Of course it also depends on the agent whether she/he will pursue the remaining from her client.

Please give me a thumbs up or choose best answer if this helps.

Susie Kay, Realtor®
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240


Servicing your real estate need is my priority!
0 votes Thank Flag Link Thu Dec 12, 2013
Your buyer's representation agreement probably states this. While I use representation agreements on the occasion where a property is being sold at less than the standard 3% buyer's side commission I do not charge this to my clients. While he or she can do it I myself would never charge that to my client.

Don Groff | REALTOR® & Mortgage Broker
Austin Real Estate Pros & 360 Lending Group
o 512.669.5599 | m 512.633.4157 | listings@dongroff.com
websites: http://www.AustinListed.com | http://www.360LendingGroup.com
Web Reference: http://www.AustinListed.com
0 votes Thank Flag Link Thu Dec 12, 2013
It's not normal but as other have said it depends on whether you have an agreement or not and what it says. I have an agreement with all of my clients that says they will make up the difference if I don't receive 2.5% so it's not illegal or unethical in my case. But that's just me.
0 votes Thank Flag Link Wed Dec 11, 2013
I have never heard of that, but there are a lot of things I have never heard of,


0 votes Thank Flag Link Tue Dec 10, 2013
Wj in Austin,
As so many have aptly described, what the buyer may be required to pay does depend on the property they select. As Don explained, the compensation to the BUYERS agent is established by the SELLER and the sellers agent (listing agent)...that can and has been in select instances ONE WHOLE DOLLAR. I do not think any BUYER expects their agent to work for ONE WHOLE DOLLAR.
Your agent has established their minimal compensation to be 2.55%. (your numbers)
All real estate professional fees are negotiable. .05% is an odd value? is this a typo or. Is there more to be told?
How much do you want the house?
0 votes Thank Flag Link Tue Dec 10, 2013
"Normal"? I guess not. But "acceptable"? Yes, under certain conditions. But it shouldn't have come as a surprise to you.

Here's what very likely happened. First, the commission is negotiated between the seller and the listing agent. I'm guessing in this case the agreed-upon commission was 5%. I'm also guessing that the listing agreement specified that the commission would be divided 50/50 between the listing agent and the buyer's agent. That's fairly typical, though it could have been structured, let's say, 2% to the listing agent and 3% to the buyer's agent. In this case, it wasn't.

So a buyer's agent is only going to receive a 2-1/2% commission.

Now we get to you, your agent, and your buyer's agreement. I'm guessing that you signed a buyer's agreement stating that your agent would receive a 3% commission. That's fairly typical--though, of course, all commissions are negotiable. And since a lot of commissions are 6% total, a buyer's agreement promising half that, or 3%, to the buyer's agent usually works out fine.

Problem is, I'm assuming, that the listing agreement calls for a 5% commission split 50/50--so 2-1/2% will go to your agent. The buyer's agreement you signed calls for a 3% commission to your agent. You agreed (in the listing agreement) to pay any shortfall so that your agent's total commission would be 3%. And that's probably why you're being asked to pay 1/2% commission.

Check your buyer's agreement to verify (or clarify) my assumptions.

Ethically, as is discussed below, you should have been shown the property. But you should also have been informed that your agent would expect you to pay a portion of the commission. Some buyer's agents, for purposes of goodwill, would forego that additional commission. But if the scenario I've described above is correct, then--technically--you've agreed to make up the difference.

Again, check your buyer's agreement. Then discuss the matter with your agent.

Hope that helps.
0 votes Thank Flag Link Tue Dec 10, 2013
Don Tepper, Real Estate Pro in Burke, VA
That is not normal or ethical unless you have an agreement that states that he/she would charge you any percentage. If there is no agreement, you should not pay a dime.
0 votes Thank Flag Link Mon Dec 9, 2013
So, if a flat fee broker had entered the listing into the MLS stipulated the buyers agent gets ONE WHOLE DOLLAR, that is what the buyers agent must accept? Buyers AND sellers DEMANDED options and they got them. What the buyer is required to pay now depends on the real estate they select. There is no 'ethical' issue, UNLESS you believe flat fee brokers who defer compensation onto the buyer, rebaters and limited service are also unethical. Further, would it not now be unethical for an agent to work with ANY buyer with out a signed agreement? It just gets more complicated...just what buyers and sellers wanted.
Flag Tue Dec 10, 2013
That depends. Typically when you own a property and are Selling it in ATX 6% is the cost for the Seller. If you are Leasing 75% of 1 month's rent is standard. If you are the Buyer or Leasee. You should be paying NOTHING. If the Realtor is the Buying Agent they are most likely trying to get the .05% that they are normally used to to be paid by the Seller. Always contact a TX licensed lawyer for ALL legal questions to be answered because TREC specifically and repeatedly states Realtors are not allowed to provide legal advice. Like any straight commission profession some choose to get whatever they can. My creed is to never chase a commission and always keep the clients best interest at heart. In short it is NOT normal for a Buying Agent to charge anything to their client. At least to my knowledge and experience since 1997. Ya never know "times they may be a changin". But not with me. Feel free to call Douglas Goff @ 512-284-3930 for a more specific chat. Cheers! {/;~)-drg
0 votes Thank Flag Link Mon Dec 9, 2013
Take a look at your Buyer/Tenant Representation Agreement. Most say you'll pay the Realtor 3% of sales price. Sometimes the listing agent will not pay a Buyer's agent full 3% commission and therefore your realtor may be asking for it at closing.

Best of luck,
Melissa Galvan
Keller Williams Realty
0 votes Thank Flag Link Mon Dec 9, 2013
That depends on your Realtor and your buyers rep agreement which most likely states 3%. IF you don't have a buyers rep agreement your agent WOULD not be able to charge you.

I have in the past have had buyers rep agreement signed with 3% I made less based on # of reasons especially with short sale or foreclosure I don't charge back the client ... I just move on .

IF your agent aware she was not going be paid standard full commissions should have never shown the property.

Lynn911 Dallas Realtor & Consultant
Multimillion Dollar Sales Producer
http://www.lynn911.com 100's of Dallas homes listed for sale or lease

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0 votes Thank Flag Link Mon Dec 9, 2013
I all lies in the agreement you made. The must be a document you signed stating you would make up any difference if the commission is less than 3%. It would likely be in the buyers representation agreement.
0 votes Thank Flag Link Mon Dec 9, 2013
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