Buyer agents are most often compensated from the seller proceeds at the time of closing. While the payment comes from the proceeds, the minimum fee that a buyer agent will be paid can be determined by a negotiated agreement between the buyer and the buyer agent.
It is in the buyers best interest to discuss buyer agent fees and expected services with the buyer agent. Do you want the buyer agent to contact FSBOâ€™s and other unlisted properties? It is wrong for a buyer agent to select properties to be shown based upon the offer of compensation as represented in the MLS, and allow a buyer to believe they are being shown all properties that meet the buyer specifications.
A buyer agent or the broker for which they work might determine his/her minimum fee for buyer representation. If you, as buyer, execute an agreement to that effect, your buyer agent will then show you all properties in the MLS and FSBO properties. Once you locate a property for purchase, the seller offered compensation would first pay the buyer agent. If there were no seller offered compensation, or it were less than the agreed upon minimum, the fee could be built into the offer made and still paid at closing from the seller proceeds. You can also pay your buyers agent by making payment to the buyer brokerage company directly.
If you decline to execute a buyer agent agreement, the buyer agent should show you all properties in MLS that meet your criteria, unless they clearly communicate their minimum fee structure and provide you full disclosure that they will only be showing you properties within that range. A buyer agent cannot be forced to work for low compensation, so a buyer agent does have the right to decline showing you properties beneath that threshold........but you, as buyer, must be informed.
There are buyer agents who will favor the property listings that offer stronger compensation, so it is in your best interest as a buyer to have a buyer agency agreement. While a Realtor should not favor listings because they have a higher compensation, the buyer agent agreement you execute substantially eliminates that possibility. The same agreement also outlines the terms and expectations of service, which is to your benefit.
The value that the right buyer agent brings to the table may protect you and save you thousands of dollars. The results of that contract on the same property may still be more financially advantageous than if you had used a different agent who was not as skilled or knowledgeable.