How We Get Paid

How We Get Paid

 

How Traditional Agencies Get Paid

 

Traditional Realtors® get paid on commission, according to the compensation clause in their employment agreements with their employers.  A property listing agency negotiates a commission into the listing agreement intended to cover both the listing side and the selling side of the transaction. The portion offered to the selling agency, often referred to as the Buyer Agent Commission, appears in the listing agreement version that all can see. The commission portion to be retained by the listing agency is not disclosed to those outside that agency, as it is viewed as no one else’s business. However, it will appear at the closing in the HUD 1 settlement statement, along with all other closing costs and adjustments that the parties incur.

 

The Buyer Agency’s commission will be divided between the buyer agent’s company, the buyer’s agent, and, where applicable, any referring party responsible for the referral of the buyer to that agency.  The division of that commission will be in accordance with their various agreements among agency, agent, and referring parties, and is confidential to their company. It is no longer safe to assume it is split 50/50, nor is the split relevant outside the parties to those agreements.

 

How Our Exclusive Buyer Agency Gets Paid

 

Since we do not list properties or represent listing agents or their agencies, we have no employment agreement with sellers, as do traditional agents.  Our employment agreement is with our buyer clients, who employ our agency to represent their best interests in their purchases of  properties on terms and conditions favorable to them as buyers. Listing agencies, however, must, in order to be able to use Multiple Listing, offer us compensation for selling their listings, and they determine the amount they will offer in each listing. They can offer high, low, or anything they wish, and, at the closing, it is applied to the buyer agency’s compensation, which may or may not be identical.

 

Our exclusive buyer broker employment agreement must, of course, have a compensation clause, but ours offers our buyer client a choice as to how we may be paid.  It may be a percentage of the purchase price, as is traditional, or it may be by a flat-fee-plus-bonus method designed to provide us an incentive to drive the price down. Each option is clearly spelled out in our agreement, with the second option designed to reassure anyone who may be concerned about a percentage’s conveying a certain incentive to the selling broker.

 

Regardless of the option chosen, our agreement provides for the buyer’s agent to negotiate for the seller to pay part or all of the buyer broker’s compensation. Thus, the buyer’s exercising his right to have his own exclusive buyer’s agent should not to cost him a cent more than it would have if all agents had represented his adversary.