My son’s § looking at building lots. Found one, there was a realtor’s sign, so he met with him. Apparently it was owned by his father, a real estate developer. The lot was not really acceptable, and my son later noticed some other (unmarked) land nearby. Called realtor who met him there with no specific idea of actual size and boundaries of the new lot. P has been arranging a loan, which he told realtor.
Last Friday, the realtor emailed him a sample contract. It indicated that the realtor was representing P, *not * the seller. He also said not to worry about a commission, it was build into the (as yet unsettled) price.
I’ve bought a home and a farm, and been tangentially involved in a few other real estate deals. Doesn’t the realtor generally work for the seller? The guy seemed kind of clueless, and this contract made me uneasy.
Most real estate sales involve two agents, one who lists the property for the seller, and one who shows it to the buyer. The buyer has always received part of the sales commission.
Recently (i.e. the past two decades or so) it has been common for the buyer’s agents to request a contract. It often stipulates that the buyer will pay this agent if s/he buys any property within the period of the contract - typically six months.
This is not unreasonable when you factor in buyers like me. I spend hours looking at everything on the market and am, in general, a total PITA.
So, this realtor is expected to negotiate aggressively for the buyer, and get half the 6% commission.
I’ve always wondered about this. Thank you j666 .
Nitpik: I think you meant to say “buyer**'s agent**”. The buyer does not normally receive a part of the commission. If the buyer has no agent, then the seller’s agent normally will receive the entire commission and not share it at all.
I think this is significantly wrong.
If you walk into a real estate agent’s office and ask to look at houses, they’ll show you houses that are listed directly with the agent and houses listed with other agents. In the first case, they get the whole commission if you buy it, in the second they split it with the listing agent. But in both cases, THEY ARE WORKING FOR THE SELLER! Their job – and their incentive – is to get as high a price as possible for the house. THEY DO NOT WORK FOR YOU!! THEIR JOB IS NOT TO NEGOTIATE FOR YOU!! They may – like any good salesperson – lead you to think that they’re on your side (and some might not be above trying to make you think that the listing agent is on the seller’s side but they’re on you’re side), but that’s not true. They certainly have an incentive to do helpful things for you if that’s going to make the sale go through, so I’m not saying avoid them, but remember that they are salespeople and treat their advice as such: their job is not to save you money; in fact their job is to get you to spend as much money as possible.
Now, it is possible to hire a buyer’s agent, in which case their job is to work for you. I assume that generally these are flat fees (why would you use commission to pay a buyer’s agent? That means the worse they negotiate for you, the more they get paid!)
I think buyer’s agents are becoming more common, but still fairly rare, and certainly not what will happen if you walk into a random agent’s office and ask to see properties.
In the OP’s case, best thing of course is to read the contract carefully, and ask about anything you don’t understand. I’d assume the agent is acting as a salesperson for the seller, and treat negotiations accordingly.
It’s certainly reasonable for the agent to have a contract that requires a commission if you buy any property that the agent shows you or tells you about; they put in the work and shouldn’t get screwed out of their commission.
But I wouldn’t sign a contract that gives them a commission on property I bought that I found out about through some other means.
Tell your son not to sign anything! This sound extremely shady to me, with my 26 years of experience in real estate.
The real estate agent had no specific idea of the size and boundries of the next lot? Every agent has access to property tax records and maps, and can get that information in a matter of minutes!
Don’t worry about a commission? The seller pays the commission at closing, so every agent is in effect working for the seller.
Tell your son to check with the city as to dimensions and land classification of the lot (what can legally be built there without requiring a variance). And do not sign the contract.
Is this meant to be salesman humor? Where else would the commission be?
Of course the buyer should worry about what it is; ultimately, like every other dollar in the transaction, it’s coming out of the buyer’s pocket. This can sometimes afford some leverage; if, for instance, there is no buyer’s agent and the seller’s agent does not have to split the commission, the seller’s agent may agree to take a lower commission (and still come out ahead) in order to sweeten the deal.
I’ve bought property three times now (and sold twice), and nothing about the OP makes sense to me.
In my neck of the woods, buyers don’t pay commission for a sale - sellers pay the whole seven per cent (my best recollection of the amount). I believe you can sell and buy real estate here without an agent, but I never have. I’ve also never bought or sold without using a real estate lawyer.
What was the question again? Oh yeah - get your own agent who represents YOUR interests.
Not true.
Please, everyone, remember that in the USA, real estate agents are regulated by the states, not the feds. This means that practices and legal representation will vary by state. What I am saying here applies only to the state I am in, Wisconsin. I am not qualified to say how it works in other state.
When I begin negotiations for a buyer, I have to hand him one of two forms, a (1) Disclosure to Client, or (2) Disclosure to Customer. It’s the buyer’s choice which one he signs.
My advice to a buyer is make sure, on paper, that the agent you are working with is working for you, or at the least, taking a neutral stance (that’s possible, too).
If he signs the Disclosure to Customer, he becomes my customer, and I represent the Seller. If he signs the Disclosure to Client, he becomes my client, and I represent the Buyer.
How do I get paid? Depends. If the property we are negotiating on is MLS listed, we will accept whatever is offered by the listing broker, which is the way it usually works. There are other scenarios, which I won’t go into right now.
Please note that even though the seller may be footing the bill for the commission, by law, I must represent my client, which may be the buyer. I have duties and responsibilities, outlined in the disclosure forms, independent of where the commission comes from.
What does that “sample contract” say at the top? I’m thinking this might be a disclosure form.
Huff! Some people are just so picky about words and stuff!
(Yes, I did mean to say “the buyer**'s**” [agent]. Definite “eats, shoots, and leaves” there.]
No, in my experience, buyer’s agents do not get flat fees; they get half the commission. And this is reasonable when you have a good agent. I had a wonderful one in Maine (she was on House Hunters); she spent two full days showing property in different price ranges, different locations, to help us identify the type of property we wanted. She had every right to ask for a commitment from us after she had invested so much time. (We actually didn’t sign an agreement, we selected a house very quickly.) And she put a lot of work into getting the deal to go through. I might not recommend using a buyer’s agent, but I would definitely recommend the only one I’ve used.
I disagree; it sounds more like incompetence.
But, again in my limited experience, the buyer does not negotiate a commission with an agent; the agents negotiate the split. The buyer’s primary commitment is to guarantee the agent gets compensated for helping them locate a a property.
A Buyer may negotiate anything with an agent. Here’s the way we typically do it.
If a property IS listed in the MLS, the agent will accept whatever is offered by the listing broker, but the buyer may be asked to make up the difference between what is offered and a minimum (doesn’t happen very often).
If the property is NOT listed in the MLS, the Buyer will pay the agent a certain percentage of the sale price. This allows the agent to approach property owners who might be willing to sell, but have not yet put their property on the market.
Note that we often toss around terms like “broker” and “agent” without defining them as much as we should. To clarify, all selling commissions are paid to the listing broker’s company, not the agent. The broker’s company will pay the agent whatever split they have negotiated in-house.
If two companies are involved, one (the listing broker) represents the Seller, always. The other may represent either the buyer or the seller as a sub-agent. This kind of transaction is called a “co-broke.”
Not sure if commercial works differently but it sounds like the agent is trying to work some sort of dual agency within the same broker (his dad).
I thought this was a different lot from the one owned by the father.
Either way, to show up without the specs and then ask for a contract is a tad pushy, to say the least.
It hasn’t been established just what this “contract” is. Is it a disclosure form or a purchase contract or what?
Well I don’t think the agent still doesn’t know the dimensions of the second lot. He just didn’t know it off hand when the OP’s son asked.
I’m willing to bet that the “contract” is really just a buyer’s listing agreement and not a purchase contract. It’s a bit presumptuous but not entirely unheard of. IIRC, a buyer’s listing contract is not binding unlike one for a seller so… that’s a good thing.
What is a “buyer’s listing contract” or a “buyer’s listing agreement”? No such terms exist in my state.
See, with first lot, the agent was the sellers agent.
But for this new lot, the agent your son is talking to is NOT the sellers agent,
so the agent is going to try to act as the buyers agent !!!
About the commission…
The buyer: pays Price.
The vendor : gets ( price - commission)
The agent(s): gets commission …perhaps split in half.
(We don’t have buyers agents in my state very often … but it seems to be common practice in yours.)
Thanks for all the replies The contract is largely blank, I don’t think it was intended to be signed at this point. The only section filled out is the beginning, where the Realtor is described as my son’s agent. He did produce a plat map of the property. State is Arkansas BTW.
Never mind that. What kind of contract is it? What does it say at the top? There are hundreds of standard contracts in use.
“Exclusive Buyer Agency Agreement” 1. Right to represent