How Is a Buyer Agent Commission Amount Determined?



Let's start with the question of who decides how much a buyer's agent is paid. Is the MLS listing a point of reference with regards to the fee of the buyer's agent? No. Not in any way is it settled on by how much the seller is adding for the agent's fee contrary to people's opinion.

According to the Buyer's Representation Agreement, in Texas that is, it is a decision settled by the buyer and the hired agent. Practically saying that the buyer gives his agent his salary. It is the Buyer Rep Agreement that dictates the buyer agent's compensation amount, not the MLS Listing.

The buyer accedes to the 3% pay for our job done as mutual consent on the Buyer Rep Agreement. We receive the 3% without regardless the MLS listing as described to the buyer. The charge amount is first asked for from the seller usually a closed deal but if the seller gives less than 3% through the MLS Listing, the buyer is obligated to pay the discrepancy 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.

So far this year, 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 knocked off 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 buy a different home. The 0.5% variance paid for by the seller afforded the buyer to complete the 3% commission for us. Our buyer could afford the gap and the seller didn't actually "save" anything by offering a lower commission.

Do Realtors Avoid Listings That Pay Less Than 3%?

The statement by consumer groups and others that agents will shun the listings of discount brokers is silly to me. I don't see how they can. When a buyer signs up with us, or any other Austin Realtor, we have the ability to assemble an Internet search portal that notifies the buyer via email each day of new listings that go with that buyer's requirement. Every buyer gets this same service from us but cannot say percentages other agents in Austin carry out the same, but it is a priceless tool for us and our buyers as part and parcel of the MLS System with no extra cost.

Search engines do not recognize the commission amounts presented on specific listings. Buyers can browse listings apt to their criterion. For those who say that Realtors evade or ban listings that pay less than 3%, that's pure crap. The MLS technology does not allow a way for us to sort out those listings or hide them from the buyer.

The buyer sees all listings that are available and matching their standard, and they often call us right away when an interesting one pops up new in the system, and we will show buyers any and all listings that they consider to be considered good buys.

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