According to the National Realtors Association, 90% of homebuyers use a real estate agent when searching for a property. These agents are known as Buyer’s Agents. With a Buyer Brokerage Agreement, the Buyer’s Agent provides Agency to the buyer, in the form of a Client-Agent relationship, owing all loyalties to the buyer. The Law recognizes the Brokerage Agreement and authorizes the Buyer’s Agent to work solely on behalf of the buyer, in all aspects of the process. Without a Buyer Brokerage Agreement, the Law expects that all agents are representing the seller and requires agents to disclose any and all information learned b y them to the seller, to strengthen the seller’s position in the transaction. With the Buyer Brokerage Agreement, the Buyer’s Agent is loyal and owes allegiance to the buyer, not the seller, and confidentiality is ensured to protect the buyer throughout the entire process.
The Buyer’s Agent oversees the purchase process for the buyer, including helping identify potential properties, accessing and showing these properties to the buyer, identifying vendors, home inspectors, contractors, specialist, etc., and coordinating all their activities to ensure a timely completion of all necessary steps in the process. The Buyer’s Agent does all the negotiating on behalf of the buyer, to achieve the best position for the buyer in the transaction. The Buyer’s Agent will advise the buyer on all aspects of the transaction, alerting the buyer to issues and/or advantages to be had in the process. The Buyer’s Agent will write and inspect all documents to ensure they are complete and all necessary information is provided. The Buyer’s Agent will oversee the collection of all necessary documentation and provide that to the Closing Attorneys, Title Search Company and Mortgage providers, to complete the transaction smoothly.
Shopping for a home without a Buyer’s Agent is like grilling a tenderloin without a meat thermometer…without the guided expertise provided to the buyer in the process, a buyer might not know there’s any problems until they are sitting at the table, too late to make alternate plans and committed to the outcome.
Who Pays the Commission and How Is It Paid?
Many Buyer’s believe they can save money by not working with a Buyer’s Agent and “going it on their own”. Unfortunately, they are mistaken and often get taken advantage of by not having their own professional representation. All agents get paid commissions at the closing table regardless of who they represent.
It’s often said that the seller pays the Buyer’s Agent commission, and this is how it appears to buyers at the closing. It is true that the payments come from the seller’s proceeds from the sale. However, the fact is that the commission is often wrapped into the house price, so the buyer is paying for it anyway. In other words, the seller factors in the cost of commissions when they price their homes, to ensure their net proceeds meet their needs. A Co-Operative Commission is created, usually from a 50-50% sharing agreement made by the Listing Agent. It is paid from the seller’s side, on paper, which make it appear that the seller is paying for it. However, the only people funding the transaction are the buyers, so buyer’s always pay.
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