Most of the time, home buyers do not need to pay their agent a fee out-of-pocket since normally it is built-in to the price of the home, but that doesn’t mean the fee is unimportant. The National Association of Exclusive Buyer Agents (NAEBA) offers the following shopping tips on fees, commissions and referrals for home buyers.
Find out about the buyer agent’s fees upfront and get it in writing. – In a typical real estate transaction with two agents, the commission is split. There are times, however, when the buyer’s agent may have agreed to a different fee. In rare cases or in cases where the seller does not have an agent, arrangements may have to be made for agent compensation. The buyer should find out in advance what the agent’s compensation is so that prices can be compared.
Buyers should not count on being able to negotiate a lower fee but can shop around for one. – There is not a “standard fee” in real estate. Buyer agents each set their own fees just as other professionals like doctors and lawyers do. If an agent does agree to negotiate a lower fee from what was originally quoted, many factors are considered including the price of the home, the expected length of the home search, the type of financing being used for the purchase, having a previous relationship with the buyer, and the agent’s expenses. Keep in mind that just as fees vary from agent to agent, so can the services offered. Be sure to compare apples to apples when shopping and ask if the agent will remain on your side no matter which home you purchase or if they will ask you to agree to lesser representation.
Sometimes a buyer agent will pay a referral fee for a relocating home buyer. – According to NAEBA President Dawn Rae, “Referral services can be a great way for a buyer to find the right buyer agent, but they may affect the compensation or even the willingness of the buyer agent to work with a particular buyer.” These referral fees, which can only be paid to other licensed brokerages, not to a consumer, have been recorded as high as 40% of the agent’s commission. Buyers’ agents consider this a marketing cost and simply a cost of doing business so it generally does not affect the fee a buyer pays, but some brokerages will refuse to pay referral fees to outside referring services they consider to be excessive. Adds Rae, “Even though NAEBA collects referral fees through its for-profit subsidiary to fund its mission of protecting home buying consumers, the referral fee is kept lower than the rest of the industry so that participating buyer agents are willing to work with all buyers.”
It’s important that home buyers interview several agents and get all the facts before selecting one. Find Exclusive Buyer Agents who will represent you no matter which home you purchase and will NEVER ask you to agree to lesser representation.