How do commissions work?

This is something that often is misunderstood by some buyers. Recently I showed a property which was listed with my team. I will always ask if the buyer is working exclusively with an agent. If they are, then I explain to them that they need their agent to show them the property.

On this occasion the buyer was not working with anyone. He did not like this particular home, so I asked if I could look for other properties for him. His response was that he only works with the listing agent, so that he can save half of the commission. Hmmm......I thought here we go!

I then explained to him in this market, the seller pays the commission to the realtors involved. I asked him to explain to me how he would save on the commission.  He said he had been buying and selling Real Estate for years he knows how it works. I find this very unfortunate if he has been doing this for years and still does not know how it works. 

Happy Buyers

How might the buyer think he could save?

The buyers mindset is that he will get the property for less if just one agent is involved in the transaction. The fact of the matter is that no matter if  one or two agents are involved it is still the same amount of work. There would be no reason for the seller to pay less of a commission knowing that their agent has listed and marketed their home, and now they will set up home Inspections, appraisals, get all the paperwork to the title company, follow up with the lender and make sure that the transaction moves through to closing smoothly.

Another thought on this!

On the other hand there is no reason for the seller to reduce the price on their home for this particular buyer. One way to think of this is if you were the seller and you knew what the value of your home was, why would you reduce the price just because your listing agent had the buyer. Our job is to find a ready willing and able buyer for any properties we are marketing. We work very hard and get the job done!

This content created by Barbara VanderMeulen Lead Buyer Specialist


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