Since the percentage of commission on homes we've looked at are so very low, should we pay our agent?

Asked by Ruth, 53563 Fri Jan 9, 2009

She has spent an awful lot of time helping us find a home, and hasn't seen a cent yet. What is the right thing to do? We haven't signed any contracts with her or anything. But when I sat down and figured out how many hours she's spent with us already, and we still haven't bought a home, I don't see how she can come out ahead. We are looking at houses in the $150,000 - $180,000 range, and some paperwork says only 1.5%, and the most I've seen is 3% for a buyer's agent. We don't want her to resent us taking so long to find the right place. Any thoughts?

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Dallas Texas, Agent, Dallas, TN
Sat Jan 10, 2009
WOW you are an awesome buyer to have concerned understand time vested an agent has in a client on belief you would purchase a home. She more than likely splits her commissions with her broker and receives 1.5% of 3% paid to buyers broker. Nice closing gift, would be great.

As our team sees sales some are fast other clients are slow thru out high and low we have a happy middle of road.
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1 vote
Cindy Craig, Agent, Green Bay, WI
Tue Jan 14, 2014
Ruth, there is actually an avenue all set that can address this. Here in the state of WI you can sign a Buyers Agency Agreement with her (her brokerage) This agreement will have the added benefit for you of having her actually representing your best interest and you can ask her to address the commission she gets on this form. By indicating a higher commission rate on the Buyers Agency Agreement you are actually agreeing to pay the difference at closing. ie - if she (her brokerage) is offered lets say 2% commission by the listing office and you have her put 3% on the Buyers Agency Agreement, you would be accountable for the 1% difference at the close of your purchase. If you think she should have more, this is the perfect avenue.

There will be no worries about what is legal, the IRS and/or licensing issues for her.
0 votes
Angelmommee, Home Buyer, Wisconsin
Wed Sep 22, 2010
Ruth, who's your realtor? I need her to sell our home! Or maybe you'd like to buy it?
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Debby Thomps…, Agent, Wauwatosa, WI
Wed Jan 14, 2009
You are really a great buyer. The best way you can help your agent is to give her name out to everyone you know. That would show her that you really likes what she is doing for you. As an agent it is ture that we do not get paid until we find you the right home and it closes. That is part of the deal as an agent. She will not resent you at all for taking to long. Just make sure you are telling her what you like and so not like about the homes you are looking at so she can narrow down your search. And remember word of mouth advertising is better then any amount of money you could give her. Good luck I hope you find that home.
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Bill Eckler, Agent, Venice, FL
Sat Jan 10, 2009

Bless your heart......

But agents know what they are getting into and understand the costs and potential professional fees involved in a transaction. Contrary to what many people would like you to beieve the majority of agents are service oriented and work hard to please their customers. Granted, pats on the back do not pay the bills but spreading the work may help in the future.

If you have found an agent that is "special" often the greatest compensation is you, the customer, giving them referrals. Tell your friends, relatives, or anyone that will listen what a great job they have done for you

Additional compensation is neither expected nor necessary. Go out of your way to reward them with additional customers.

Thanks for caring.
The Eckler Team

Michael Saunders & Company
0 votes
Randy Hooker, Agent, Chandler, AZ
Fri Jan 9, 2009
You're welcome, Ruth. Well... that's an even tougher question. Most of the exclusive Buyer's Agents I know (including myself) work for a minimum of 3%. So one idea might be that you compensate her the difference between 3% and the actual commission that's offered on the home you end up purchasing. Another idea is that you simply pay her a flat fee bonus, like maybe $1,500-$2,000. At this point, it's rather like tipping a good waitperson for excellent service ~ the question is, how much? I think you'll just have to go with your conscience, and from what I sense, your decision will be just the right amount to honor and humble your Agent. ;-)

As for the method of compensation, Ruth, most states require that commission be paid to the Licensed Broker (your Agent's firm). They would no doubt love to get their fair share of the "bonus." However, if you're just wanting to do something nice for your Agent, then that's between you and her. Paying ANYBODY in cash raises all sorts of questions and potential problems, starting with the IRS and working down from there. Perhaps you should consult with your Agent about that, and the two of you work it out.

Does that help?

0 votes
Ruth, Home Buyer, 53563
Fri Jan 9, 2009
Thank you, Randy.
Any thoughts on an appropriate "bonus" amount to give her? And is it best (for her) to give her cash?
0 votes
Randy Hooker, Agent, Chandler, AZ
Fri Jan 9, 2009
Hi Ruth!

I first have to tell you that I truly admire and respect your sensitivity and loyalty to your Realtor. I don't think I've EVER had a client calculate the amount of time I dedicated to them. But you raise an interesting question.

On one hand, if your Realtor wanted or expected to receive a 'minimum' commission, or didn't think she would be treated fairly by her MLS co-broke commission, then I would think that she should have discussed it with you upfront. On the other hand, if you truly value her services to you, then perhaps you could consider paying her a 'bonus' at closing. You are definitely under no obligation or duty to do so, but I believe in karma, or "What goes around,comes around."

Thank you for your most refreshing comments and question!

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