real-estate-dual-agency-buyers-and-sellers“So what will it cost us to secure your services?”  One of the top questions that I receive.  The answer may vary depending on the services you request.  For the purposes of this 3 part series, I will let you in on Renter’s Agent, Buyer’s Agent, and Seller’s Agent pay.  According to the 2013 National Association of Realtors Member Profile, “In 2012, the typical agent had 12 residential transaction sides – up from the previous year when the typical agent had 10 transaction sides.”  Traditionally, the real estate industry is completely commission based.  Most of the time, a Realtor works under the supervision of a broker unless they are a broker themselves.  In that case the broker may have their own company or work with a large, well known company like Keller Williams for example.  There is also the option for a Realtor to work on a team within a larger company.  All of these folks require payment.  So realistically, on one real estate transaction, there is the potential for the commission to be split 6 different ways before it is all said and done.  Let’s take a look at the Buyer’s Agent…

The Buyer’s Agent.  This agent does not cost the buyer a dime in this area.  As I talk about in 6 Reasons NOT to Call the Realtor on the Sign, my services to you as a Buyer Representative are practically free.  The commission percentage is agreed upon between the seller and the selling agent.  Generally, the selling agent will agree to split that commission with the buying agent, so you my friend, are off the hook!  All of my expert assistance, with no money down!

There will be a Buyer Representation Agreement.  A Buyer Representation Agreement details my duties to you as your agent, yours to me as a buyer, and that we mutually agree to work with each other.  I agree to work as your representative, and you agree to be represented by me.  It also specifies things like the length of time that the contract is good for, what type of home you are searching for, and the sources used for the search.  According to the Tennessee Association of Realtors® (TAR) Consumer Guide to Agency Law in Tennessee, “Once you have signed a Buyer Representation Agreement, this contract obligates your agent to be your loyal advocate and to promote your best interests above all others in the negotiation and closing of a successful purchase.”

This part is important to us Realtors, and I think you will be able to see why.  I’ve only had it happen once, but it still stings.  A potential buyer contacted me months before their anticipated arrival.  There were some specifics that they required in a home.  I searched, and searched, sifting through listing after listing (hundreds!) to find the right ones to show them.  Hours of my time before they ever arrived.  I answered their questions, blocked my time for them in preparation for their arrival, and was completely dedicated to easing their transition.  To make a long story short, they didn’t want to sign my Buyer Representation Agreement when they arrived, even though I agreed to write in the special stipulations that I would let them out of it if they so desired.  For three days, I searched for homes, arranged showings, and took them to see houses.  We drove from one end of Clarksville to another, and I held other clients off out of loyalty to the time I had blocked for them.  On the fourth day, after arranging another evening of house hunting, they stood me up.  Property transactions are noted in our Multiple Listing Service (MLS), and are ultimately public information.  It wasn’t long before I discovered that they had bought the very first home that I showed them.  Hours, and hours of my time wasted.

But moving forward, how is a Buyer’s Agent paid?  We find the home you love, and go under contract.  On the MLS sheet, the compensation amount is listed.  This is a percentage that is split between the Seller’s Agent and the Buyer’s Agent.  Then, as I spoke of above, this is split with the agent’s broker, and may even be split with the agent’s team if they are on one.

Here is an example:

The price of the home is $100,000.  The commission is 6%; 3% to the Seller’s Agent, and 3% to the Buyer’s Agent.  The brokerage split is 70/30.  The royalties to the company are 5%.  And then the split to the team is 40%.  The paychecks may look like this;  $900 to the brokerage, $150 to the company, and $780 to the team.  That potentially leaves $1170 to the Buyer’s Agent before taxes.

Buyer’s Agent Expenses. So dang, those agents make a lot of money, right?  Hold your horses!  On top of our split, we have all of these additional expenses and then some:

  • Various taxes
  • Office fees
  • Office supplies
  • Realtracs subscriber fees
  • Advertising (signs, websites, business cards, etc)
  • Clarksville Assocation of Realtors dues
  • Tennessee Association of Realtors dues
  • National Association of Realtors dues
  • Dues for other professional organizations we may belong to
  • Closing gifts to our buyers
  • Electronics (computers, cameras, etc)
  • Phone bills
  • Vehicle maintenance
  • And the worst of all… GAS (sometimes multiple times per week)!

Bonuses.  I will let you in on one last little secret.  Everything in real estate is negotiable.  Sometimes if a particular listing has been on the market for a long time, or if the seller is motivated to get the home sold quickly, they may include a bonus to the Buyer’s Agent.  These bonuses can range from hundreds of dollars to thousands (even tens of thousands) of dollars, and it is not something that you as the buyer are usually aware of.  Though any payment amounts are noted on the final HUD that you will receive before closing.  The seller and listing agent can also agree to pay a higher commission percentage as an incentive to the agent.  Keeping that in mind, if you have an agent who is passionate about the families they help, and not particularly money driven, they may opt to forgo the additional bonus or lower their commission amount to get you the deal that you want.  Not tooting my own horn, but I have done this for my clients.  I have let a few bonuses go to get my buyers the most and there are a few other like-minded agents out there.  Disclosure is the best practice in my opinion, and I do not try to keep those sorts of things concealed.  After all, realtors can offer their opinions, but we cannot make you buy a particular home.

Be sure to read Realtor Pay Exposed (Part 1 of 3): The Renter’s Agent and Realtor Pay Exposed: The Seller’s Agent (Part 3 of 3)

Does that break it down for you?  Questions?  Concerns?

If you have questions or need real estate assistance in the Clarksville, Tennessee or Fort Campbell, Kentucky area or know anyone who does, call me today at (931) 436-6765 or submit your information below.

© Ariel Anderson and, 2014.  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ariel Anderson and with appropriate and specific direction to the original content.

  1. […] Be sure to read, Realtor Pay Exposed (Part 2 of 3):  The Buyer’s Agent. […]

  2. […] Be sure to read, Realtor Pay Exposed (Part 1 of 3): The Renter’s Agent and Realtor Pay Exposed (Part 2 of 3): The Buyer’s Agent. […]

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