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How Is a Buyer Agent Commission Amount Determined?

To begin with, who determines on the buyer's agent salary? Is the MLS listing a yardstick with regards to the commission of the buyer's agent? Definitely not. Many people believe it is, but the buyer agent commission is absolutely not decided by the amount a seller is willing to put on toward a buyer's agent pay.

The pay a buyer's agent receives (at least in Texas) is concluded entirely between the buyer and the agent he hires, as instructed in a Buyer's Representation Agreement. Practically saying that the buyer gives his agent his salary. It is the Buyer Rep Agreement that instructs the buyer agent's compensation amount, not the MLS Listing.

In our Buyer Rep Agreement, a buyer assents to pay us 3% for our services as buyer agent. We get the 3% without regardless the MLS listing as explained to the buyer. The charge amount is first asked for from the seller usually a done-in deal but if the seller gives less than 3% through the MLS Listing, the buyer is duty-bound to pay the disparity if not decides to pursue a another home. On the flip side, if the seller is offering a buyer agent bonus, or more than 3%, we rebate that to the buyer so that our motivations and advice can never be attributed to a commission amount.

Presently, out of almost 30 closed deals, we've encountered only one listing that our buyer required that offered less than a 3% commission to the buyer agent. The seller on that listing offered 2.5% commission. In that case, we wrote up the offer to include the 0.5% gap in paragraph 12 of the sales contract, where the seller assents to pay some of the buyer's closing costs, and the seller agreed. If the seller had not acceded the buyer was ready to take on another home. The 0.5% variance paid for by the seller afforded the buyer to complete the 3% commission for us. The buyer's capacity to pay the difference was without question nor can the seller save for that 2.5% offer.

Do Realtors Avoid Listings That Pay Less Than 3%?

I find absurd the statement that agents will avoid of the discount brokers' listing by consumer groups and others. There is nowise the agents can do that. When a buyer signs up with us, or any other Austin Realtor, we have the expertise to set up an Internet search portal that informs the buyer via email each day of new catalog that match that buyer's requirement. We do this for every buyer. I'm not sure what percentages of other agents in Austin do the same, but it's a useful tool for us and our buyers, and it's provided as part of our MLS system at no extra cost.

The search engine is not knowledgeable about the commission amounts being tendered on any particular listing. Buyers can browse listings suitable to their need. To say that Realtors evade or blacklist listings that give less than 3% is gibberish. The MLS technology inhibits a way for us to filter out those listings or keep them from the buyer.

When the buyer gets all listings and new ones that come up in the system about properties that complement their criteria they inform us and in return we show all listings of good candidate material.

That is all I have time for now but look into part 2 of How Discount Realtors Work.

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