There is one area of buyer's representation that has troubled buyers.  It is the straight percentage commission that compensates the buyer's agent.  A straight percentage commission means that the higher the sales price, the more money the buyer's agent will receive, and the lower the sales price, the less money the buyer's agent will receive.

The straight percentage commission certainly works for the listing agent. A high price for the seller means a high commission for the listing agent.

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 at closing.

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 compensated.

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.

 

"Our services do not cost our clients any additional money"

  

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