But what about the
real estate agent who represents the buyer? Both a sub-agent and a
buyer's agent typically receive a straight percentage of the sales price as
their commission too.
A buyer's agent should be motivated to negotiate
the lowest price for the buyer. How
motivated could you expect someone to be when it will cost hundreds or
thousands of dollars of commission?
This situation is
called a conflict of interest.
A buyer's agent
should earn more commission for negotiating a lower sales price.
To correct this
situation, we developed a fee formula that rewards us for negotiating a lower
sales price. The lower the sales price, the more we are compensated.
The first thing to
remember is that the buyer never pays us any money. Basically, we are
sharing our commission with the buyer. The only money we receive is the
Co-broker fee offered by the seller or listing real estate firm. Typically
we receive 3% of the actual selling price of the home.
Our fee formula
determines how much of the 3% we keep and how much we refund back to our buyer.
Our fee formula is 2% of the initial
listing price of the home, plus 10% of the savings we negotiate off the initial
price, plus 10% of any closing costs we negotiate that were not initially
offered. A couple of examples follow:
If the sales price
of the home is $250,000 with a 3% Co-broker commission and the seller would only
accept full price, then we would receive $7,500 (3% x $250,000). We would keep
$5,000 (2% x $250,000) and we would refund $2,500 ($7,500 - $5,000) to the buyer
If the same $250,000 home was negotiated down to
$240,000 with a 3% Co-Broker commission, then we would keep $6,000 and refund
$1,200 to the buyer.
This unique formula lets us both win as we
negotiate the lowest price for the home.
This is the way a buyer's agent should be
Occasionally, the seller or listing agent will
offer an additional selling bonus to the agent who brings them a buyer.
Our policy is to pass any selling bonus on to our buyer.
When we refund this additional money back to our buyer the total refund
could exceed 1%.
Please note: if the fee formula amount is greater
than the co-broker commission that we receive, we waive the additional
amount of the fee formula above the amount we receive.
The buyer never pays us any money.