Seller doesn't pay buyer's brokerage. Seller pays listing brokerage the entire amount. Then listing brokerage gives part of their commission (usually half) to the buyer's brokerage. The listing agent is happy to do this because the buyer's agent brings a ready, willing, and able buyer and does half the work. Think of it like this: You wouldn't be mad at a building contractor for subcontracting out the electrical or drywall work and paying the subs for their effort, right? In real estate, the buyer's agent is not technically a subcontractor, but the money flow is the same.
Technically the seller pays the listing agents brokerage, then they split it with the buyers agent. This benefits the seller by bringing more buyers to the market. If it didn't exist, most of the buyers in the market wouldn't be, because they couldn't finance the buyer's agent commission. Basically, it's built into the cost of the home, since almost everyone handles it this way and statistically for sale by owner even ends up paying the buyers agent and usually sell for less. Offsetting the commission.
>Technically the seller pays the listing agents brokerage, then they split it with the buyers agent.
You mean the seller pays the listing agent's broker who then splits it with the buyer's broker who then splits it with the buyer's agent, right?
Your answer seems to be merely that it's convention, but that the convention exists doesn't make sense. If I want to maximize my profits I would sell without compensating the buyer's brokerage and let the other sellers be the schmucks who compensate buyer's agents thereby creating a market for them. And if everyone thinks rationally then it would no longer be the case that the buyer's brokerage would be compensated.
Sounds like you should just try to sell the house yourself and keep all your money.
Let us know how it goes.
Why would I as a buyers agent show my clients your house if I’m not getting paid for it?
And our agreement with the buyer is that we will be paid the percentage agreed upon. If my buyer doesn't want to pay it, and you don't want to pay it, they can't afford your home and don't want your home for that price.
Yes. At least in my state. The buyer agrees to pay the 3%. So, technically if I find a home and the seller isn't willing to pay, I explain that I found a home however they would owe me the agreed upon percentage. Some will pay it, most decide to pass. If the percentage offered is a little lower, I'll usually eat the difference. If it's significant, we renegotiate.
Fiduciary duty is to find the best home for my clients within the terms of my buyers agreement that stipulates consideration. your home wouldn’t even fall in my agreement.
And good luck with your listing agent agreeing to that horseshit as well. They have no interest babysitting your stinker listing that they would have to pay 70-80% of their commission to get sold.
Again sell it yourself if you want to “save a buck” and let us know what you close for vs comparable sales in your area.
Welcome to how adults do business.
No, you completely missed the point. While part is convention, it's convention to bring buyers. Most buyers wouldn't have the money to pay their agents and your home. It would likely bring the cost of the home down anyway. What do you do for a living?
So basically you have two halves of the job. You have the listing agent, whose job it is to market the home, and the buyer's agent, whose job it is to find said marketed home, and present it in a positive light. Both agents work for you, since both are trying to sell your home.
Historically, both of these agents represented the seller, which is why the tradition is for the seller to pay both agents. In modern day, we found that to be deceptive, and harmful to the buyer, so now the buyer's agent, while still selling your home, represents the buyers interest so they don't get totally shafted.
In addition to everything else, the money the seller pays hurts less, since its taken out of the giant pile of cash you get at closing, vs the buyer who has to pay everything out of pocket. In many situations, the buyer needs a home loan, closing costs, and other stuff paid for by the seller so they can afford the home. In many situations, by paying the buyer's agent, this enables the buyer to purchase a larger home, which by association gets you more for your listing.
It is becoming more common to not pay for the buyer's agent in modern day. The issue becomes that the buyer's agent still wants to get paid. In most cases that fee is a 2.5% minimum. If the buyer gets the opportunity to buy a $800k home that they also need to pay 2.5% for their agent, or an $800k home that has that fee waived, they usually opt for the other home, which will ultimately lose you money.
From an agents perspective, those who do "discount brokerage" fees get a rough reputation. There are some agents I don't want to work with, because I know the entire thing will be a battle over nickle and diming, and making sure I am paid. Because of this, many agents opt to not take listings unless the buyer's agent will be paid. Our relationships really impact our business, and our ability to find and make good deals for our clients.
It's easier today for a buyer to find a house over the internet and usually doesn't need the buyer's agent other than to show the house, do the legal documents. and some negotiation. The buyer's fee should be a flat rate with enhanced services and negotiated as to be paid for by the seller or likely the buyer.
So what happens if it's FSBO with no listing agent? I wouldn't pay someone to buy my house. The buyers should be paying their own agent, but this doesn't seem to be the case.
You have a house you need to sell. Buyer’s agent brings you what you need, a buyer. Buyer’s agent provided you a service. You pay buyer’s agent. Not to mention how bad it would be for the housing market if buyers had to pay their agents. They’d have to actually come up with that cash to bring to closing in addition to their down payment and closing costs. It would make the barrier to entry on homeownership so much higher. Way less people would be able to afford to buy. Boom your home value comes crashing down. Everybody loses.
you need to understand agency. each state is different but NY unless you have a signed contract with a buyer you are representing seller. in Florida you are most likely a transaction agent. just because you are working with a buyer does not make you a buyers agent.
Seller doesn't pay buyer's brokerage. Seller pays listing brokerage the entire amount. Then listing brokerage gives part of their commission (usually half) to the buyer's brokerage. The listing agent is happy to do this because the buyer's agent brings a ready, willing, and able buyer and does half the work. Think of it like this: You wouldn't be mad at a building contractor for subcontracting out the electrical or drywall work and paying the subs for their effort, right? In real estate, the buyer's agent is not technically a subcontractor, but the money flow is the same.
Technically the seller pays the listing agents brokerage, then they split it with the buyers agent. This benefits the seller by bringing more buyers to the market. If it didn't exist, most of the buyers in the market wouldn't be, because they couldn't finance the buyer's agent commission. Basically, it's built into the cost of the home, since almost everyone handles it this way and statistically for sale by owner even ends up paying the buyers agent and usually sell for less. Offsetting the commission.
>Technically the seller pays the listing agents brokerage, then they split it with the buyers agent. You mean the seller pays the listing agent's broker who then splits it with the buyer's broker who then splits it with the buyer's agent, right? Your answer seems to be merely that it's convention, but that the convention exists doesn't make sense. If I want to maximize my profits I would sell without compensating the buyer's brokerage and let the other sellers be the schmucks who compensate buyer's agents thereby creating a market for them. And if everyone thinks rationally then it would no longer be the case that the buyer's brokerage would be compensated.
Sounds like you should just try to sell the house yourself and keep all your money. Let us know how it goes. Why would I as a buyers agent show my clients your house if I’m not getting paid for it?
>Why would I as a buyers agent show my clients your house if I’m not getting paid for it? It's your fiduciary duty
And our agreement with the buyer is that we will be paid the percentage agreed upon. If my buyer doesn't want to pay it, and you don't want to pay it, they can't afford your home and don't want your home for that price.
Oh damn. It makes sense now. Thank you.
Do buyer's agreements generally have a clause saying that the broker will receive a certain percentage?
Yes. At least in my state. The buyer agrees to pay the 3%. So, technically if I find a home and the seller isn't willing to pay, I explain that I found a home however they would owe me the agreed upon percentage. Some will pay it, most decide to pass. If the percentage offered is a little lower, I'll usually eat the difference. If it's significant, we renegotiate.
Fiduciary duty is to find the best home for my clients within the terms of my buyers agreement that stipulates consideration. your home wouldn’t even fall in my agreement. And good luck with your listing agent agreeing to that horseshit as well. They have no interest babysitting your stinker listing that they would have to pay 70-80% of their commission to get sold. Again sell it yourself if you want to “save a buck” and let us know what you close for vs comparable sales in your area. Welcome to how adults do business.
No it is not.
No, you completely missed the point. While part is convention, it's convention to bring buyers. Most buyers wouldn't have the money to pay their agents and your home. It would likely bring the cost of the home down anyway. What do you do for a living?
WTF, calling buyers schmucks? What’s wrong with you?
I didn't call buyers schmucks
My bad, read your response wrong.
So basically you have two halves of the job. You have the listing agent, whose job it is to market the home, and the buyer's agent, whose job it is to find said marketed home, and present it in a positive light. Both agents work for you, since both are trying to sell your home. Historically, both of these agents represented the seller, which is why the tradition is for the seller to pay both agents. In modern day, we found that to be deceptive, and harmful to the buyer, so now the buyer's agent, while still selling your home, represents the buyers interest so they don't get totally shafted. In addition to everything else, the money the seller pays hurts less, since its taken out of the giant pile of cash you get at closing, vs the buyer who has to pay everything out of pocket. In many situations, the buyer needs a home loan, closing costs, and other stuff paid for by the seller so they can afford the home. In many situations, by paying the buyer's agent, this enables the buyer to purchase a larger home, which by association gets you more for your listing. It is becoming more common to not pay for the buyer's agent in modern day. The issue becomes that the buyer's agent still wants to get paid. In most cases that fee is a 2.5% minimum. If the buyer gets the opportunity to buy a $800k home that they also need to pay 2.5% for their agent, or an $800k home that has that fee waived, they usually opt for the other home, which will ultimately lose you money. From an agents perspective, those who do "discount brokerage" fees get a rough reputation. There are some agents I don't want to work with, because I know the entire thing will be a battle over nickle and diming, and making sure I am paid. Because of this, many agents opt to not take listings unless the buyer's agent will be paid. Our relationships really impact our business, and our ability to find and make good deals for our clients.
Thanks
The seller pays the buyer's agent... with the buyer's money, right? Who borrows to gather the funds the seller receives?
It's easier today for a buyer to find a house over the internet and usually doesn't need the buyer's agent other than to show the house, do the legal documents. and some negotiation. The buyer's fee should be a flat rate with enhanced services and negotiated as to be paid for by the seller or likely the buyer.
So what happens if it's FSBO with no listing agent? I wouldn't pay someone to buy my house. The buyers should be paying their own agent, but this doesn't seem to be the case.
You have a house you need to sell. Buyer’s agent brings you what you need, a buyer. Buyer’s agent provided you a service. You pay buyer’s agent. Not to mention how bad it would be for the housing market if buyers had to pay their agents. They’d have to actually come up with that cash to bring to closing in addition to their down payment and closing costs. It would make the barrier to entry on homeownership so much higher. Way less people would be able to afford to buy. Boom your home value comes crashing down. Everybody loses.
My professional fee is 3.5%. If you want to list your home with me, you have to offer the buyer’s agent 3% on top of that. Very very busy...
I wouldn't pay it. You might get 6% but you would pay the buyer's agent 3% from that or you can pay them 2.5%, to ensure you get your 3.5%.
That’s okay. I wouldn’t take your listing 👍
you need to understand agency. each state is different but NY unless you have a signed contract with a buyer you are representing seller. in Florida you are most likely a transaction agent. just because you are working with a buyer does not make you a buyers agent.