Who really pays the buyer agent’s commission?
Many buyers don’t understand Realtor commissions. They think sellers pay the commission. But in fact, buyers pay by way of the sale price. In other words, if your agent expects a 3% commission the seller must account for that when negotiating a sale price with you. If your agent lowers his/her the commission, the seller will have more flexibility on price. But having a skilled buyer’s agent who represents you does have benefits. They know the market and can help you maneuver through all aspects of the transaction. Ask your self this question: What’s the value of having a buyer’s agent? Smart buyers consider their options carefully before signing a buyer broker agreement.
We Offer Three Options:
Option 1: Classic Commission
The seller pays the commission at settlement (often 2.5% – 3% of the sale price). This is usually a short-term agreement with buyers who want the flexibility to cancel and are not committed to buying a home within a specific time frame. They pop in and out of the market over a period of time until they find a house that works for their specific needs.
Option 2: Broker Credit
The seller pays the commission at settlement. Spicer’s portion of the commission is 2% of the sale price. Any commission over 2% is credited back to the buyer at closing. So, if the total advertised MLS commission is 3% on a $500,000 price, the buyer would receive a credit at closing of $5000 (1% of the sale price). Buyers using this option agree to work with us until they find a property that works for them.
Option 3: $295 hourly fee with full commission rebate
This option is ideal for committed buyers who plan to purchase within 1 to 3 months. They like to research listings online, go to open houses and drive by homes to pre-screen them before showings are scheduled. In our hourly fee program buyers keep the entire MLS advertised commission at settlement (often 3% of the sale price). Spicer is paid $295 per hour for the services we provide. Our average hours billed per transaction is 25 hours. It can be much less on a quick purchase and it’s very rare for the total hours to exceed 30. Under this program, we’ll bill you after 3 months unless you’ve already put a contact on a listing by then. In that case, we’ll simply wait until settlement so you can pay our fee using the commission rebate you’ll receive from the seller.
Example: A buyer closes with us on an $800,000 home. The MLS advertised commission is 3% of the sale price which equals $24,000. The entire $24,000 is credited to the buyer at settlement. If Spicer spends 25 hours on the transaction our bill is $7375 (25 hours x $295). So, the buyer pays us for the hours we spent using the $24,000 commission. In this example the net broker credit would equal $16,625 ($24,000 – $7325). You can use the credit to pay your closing costs, lower the sale price, buy new furniture or put it in your savings account. It’s up to you.
We pledge to provide our clients with a high level of customer service, negotiation skills and market knowledge. As your buyer broker Spicer Real Estate will:
- Listen to you
- Help define your housing goals
- Counsel you on financing options
- Update you on new listings
- Show you the homes you want to see
- Provide market analysis
- Prepare the contract offer
- Present and negotiate your offer
- Guide you through the mortgage process
- Guide you through the inspections
- Attend settlement and the final walk through with you