Home Buying in San Mateo>Question Details

Ramona, Home Buyer in San Mateo, CA

Does the buyer's agent 's commission matter?

Asked by Ramona, San Mateo, CA Fri Jan 25, 2008

Hi,
If the buyer choose an agent who charges less commission than others, will it effect the price of the house?
In other words, who bears the cost of the buyers' agent's commission?

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Answers

9
The buyer ALWAYS pays the commission. It just comes off of the seller's side at closing so that the buyer can finance it into the loan. The seller paid the commission when they bought and on and on. It is all rolled up into the price of the home. This is why people try to "save" the commission by going FSBO. (Which never made sense to me, since only the buyers trying to save the commission go after FSBO's) ??? But that's another story.

This is why, when people pay all cash, they usually negotiate paying commission and closing costs outside of the sales price. (Which is legal in CA and makes for a lower tax base.)

Most agents don't "charge" a commission because what they are offering agents to bring a buyer is already agreed upon by the seller and listing agent and posted in the MLS.

I am assuming that what you mean by a "buyer's agent charging less", really means that you are promised a rebate of the "buy side" commission in one way or the other from a discount broker. This could be used toward "lowering" the final sales price or toward closing costs, etc... Right?

This also makes me assume that you feel all agents are created equally and that it doesn't really matter who you use. Let's look at it another way.

If you were going to choose a lawyer, a doctor or any other professional, would you choose someone who wants to earn your business based on their knowledge and skill or someone standing outside their door waving a fist full of cash, that has to "pay" you to use them? I would wonder about their negotiating skills if they had to attract clients this way.

If they are willing to give away their own money, they are willing to give away yours.

If you choose someone who cannot negotiate for themselves, you will end up paying far more for a home than you save with this type of rebate.

Let's assume that the price you are looking at is $500,000. Buy side commission as stated in the MLS is 3%. That's $15,000. Let's say your discount agent will work for 1% or $5,000. You are super excited that you are "saving" $10,000. Sounds like a good plan. So you put your offer in and let's say it gets accepted for $490,000 and you're happy because you've really just bought the home for $480,000 since you can apply the "rebate" toward the final sales price.

Happy that is, until you find out the same house down the street sold for $460,000 because they had an agent who could negotiate. An agent who gave them lots of advice and spent lots of time with them and even presented the offer in person with all the supporting data. An agent who didn't have pay you to work with them because they earn their money by saving their clients tens of thousands of dollars with their skill. How much have you really saved?

You will save much more money going after knowledge and skill than you will looking at commissions. PERIOD.

Since as buyer, you are paying the commissions anyways, you should get the best agent for your money.

Feel free to contact me if you would like someone who can save you more than the rebate in your area. The link the my info is below.
Web Reference: http://www.OCBeachBlog.com
2 votes Thank Flag Link Sat Jan 26, 2008
Hi Ramona,

In Florida the seller typically pays the entire commission. You may have a small fee from your agent, but normally sellers understand the commission is paid by the seller. If your agent finds you a home that is for sale by owner, you may end up paying the commission for your agent. However, even in this case the "for sale by owner" usually pays the commission charged by your agent.
2 votes Thank Flag Link Fri Jan 25, 2008
Hi Ramona,

Everything that is purchased has costs invloved and the buyer always pays for it. If you buy milk at the store you actually paid the cost of the farmer, the supplies, manufacturer, transportation, and the retailer..... all for $4.09 a gallon. None of the costs can be paid unless someone is willing to own the product.
In Real Estate it is the same thing. The seller can only afford to pay for the parties involved if the price offered will reflect to cover those costs (even if the seller comes out of pocket a little).
It really does not matter what you offer, it does matter whose involved to make the transaction work. You might find a Realtor who might accept less of a fee for their service, however did they help you determine this was the best value for you? Could they have let you make too much of an offer? They may not of asked the right questions of the Realtor who represented the seller's transaction to allow you to get the best price for the home.
Just like the average person does not think about the costs involved with creating a Gallon of Milk.....and the mark up on it. The cost of good Realtors actually saves you money in the long run because they knew their market and they knew the right home for you. The Seller wants to sell...... buyers usually want good mortgage terms and advice. You will benefit more if you interview the Realtor and see if they know their numbers: ... how many months supply of inventory? .... what is the avg sale price?.... how many days on market do homes sit for in your market? If they can provide you with good informed numbers then you know you have a Realtor that understands and can help educate the seller to reflect a good price for the home you are about to make an offer on......... the Sellers Realtor may need your Realtor to help him convince the seller your offer is the best one....... so that in itself is worth making sure you have the Right Realtor and makes no difference what they are being compensated. A Good Realtor will make sure they get compensated fairly and that your best interest is first.

Michael Brenner
1 vote Thank Flag Link Wed Jun 4, 2008
In our area, the seller pays the commission when the property is listed with an agent/brokerage. If it is a For Sale By Owner, before I take my client to see the house, I contact the seller and ask them to sign a one-time-showing agreement that promises me a commission if I bring a buyer. I have done this numerous times--generally a FSBO is willing to pay a 2 or 2,5 percent commission to an agent bringing a buyer.
Web Reference: http://www.MykeTriebold.com
1 vote Thank Flag Link Fri Jan 25, 2008
Well Ramona, as you can see by the answers you've recieved, it depends on the laws of the State you are buying in.

I would advise you to speak with a few buyers agents in the area you want to purchase in, or maybe an attorney and see how it affects you in San Mateo.

I know some good people to talk to if you are interested, pop me an email and I'll put you in touch with them.

Hope this helps!
1 vote Thank Flag Link Fri Jan 25, 2008
Hi Ramona,
If your buyers agent is charging a commission, it should not affect the price of the home.
It would not affect the sellers bottom line.

If your buyers agent will be paid out of the sellers proceeds (which is more typical)
then the seller already knows before listing their home, what the commissions costs
will be... Do you have a particular situation that requires a more detailed answered?
Are you being charged a commission from your buyers agent?
1 vote Thank Flag Link Fri Jan 25, 2008
Not necessarily. In Tennessee, the realtor commission is typically paid out of the seller's proceeds at closing. However, if the house you're purchasing is a For Sale By Owner, for example, the seller may refuse to pay the agent's commission and therefore you may be asked to pay it instead. Find out how that agent works in those situations.
1 vote Thank Flag Link Fri Jan 25, 2008
Any commission is always negotiable. When interviewing a buyer broker you should find one who is not charging you anything out of pocket, the listing agent sets a fee in mls that they will pay a buyers broker. You could always negotiate say that you will pay a buyer agent 2% and anything offered by the listing broker will be deducted from the price. you may gain a half to 1 percent but there is not alot of room there to negotiate.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Oct 13, 2008
The commission is built in but when buyer offer a less money for a house, the seller has to pay it from their proceeds not charge the buyer. Everything is negotiable. Call me for any questions you may have @ 904-504-8162 or visit my site @ http://www.parveshsaluja.com
0 votes Thank Flag Link Fri May 16, 2008
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