Monday, 23 October 2017

Home Buyers Getting a Deal calling the Listing Agent & Do Sellers Really Pay the Commission?

Written by Posted On Friday, 30 December 2016 13:46

Who pays the commission on a home sale?  Years ago in "Real Estate 101" at the UGA Terry College of Business I was taught by the professor teaching the class that the seller pays the commission. If two properties were sold side by side for $100,000 each, the lesson went, one a For Sale by Owner and one listed on the market with a real estate broker, the one with the brokerage commission is not going to appraise for more or sell for more because there is a commission attached. Therefore the seller is the one who pays the commission out of their proceeds, not the buyer.

Every now and then, in this current age of broker reciprocity where every listing for sale is on every agent’s website, I get a call from a home buyer who feels they are going to get a better deal working directly with the listing agent and not having a buyer’s agent involved.  There is at times too much thought among consumer advice “gurus” about the fees paid for professional advice versus the benefits of saving money through having an unemotional third-party helping you negotiate and navigate your way through the process.

It doesn’t happen often, but I know it’s one of those buyers whose focus is in the wrong place when the first question is “are you the listing agent representing the listing at….?” A few weeks ago I had a call from a very frustrated home buyer who said they were getting the run around from other agents they had spoken to and then proceeded to tell me, “We were not born yesterday!” This potential home buyer went on to say that she and her husband, “knew exactly how things worked,” and that it is inaccurate what other agents have told them regardingthe seller paying the commission.  Her quest was to find the listing agent to talk to on a given listing because it was going to get them a deal not having to pay a buyer’s agent a commission having two agents involved.

It happens. I had a past client of mine who called me recently. They had not sold their house yet, were not even ready to list it yet, but saw a home that needed some work that they fell in love with.  Not meaning to find that perfect next house, they did.  The husband called me to say that they had spoken to the listing agent a couple of times, didn’t want to bother me or waste my time initially, but then they fell in love with the house and the other agent said that if they were not working with another agent that the seller, his client, would knock $40k off the sales price.  Beyond that this gentleman conveyed that he wanted me to write up an offer to help them. He saw still the need to have an agent yet he was told he was going to get a better deal by cutting out his own representation!  Said he would pay me out of his own pocket a fee to write up the offer and give advice.

My first response to him was that if the listing agent, who once again represents the seller not him, is saying the seller would take “$X” amount of dollars, then chances are very good “they will take less!”  This is negotiations 101 so to speak.  While my buyers were telling me how much they wanted the house and how it was a dream home to them and didn’t want to lose it, my thoughts were to obviously get them the best deal I could.  Not the $300k they were willing to pay per conversations with the seller’s agent!

They agreed to let me negotiate this deal for them and in the end we negotiated a deal over $15,000 lower than they were willing and eager to pay when they thought the listing agent was offering them the best deal possible! And in the end, the seller paid the buyer’s broker commission through the contract.  Not my buyer. 

I see this in buying a car to taxes to investments.  Sometimes the advice we pay for saves us money from making emotional decisions that can cost us money through the “cost” of lost opportunities!  In the case of home buying though, said as an Accredited Buyer’s Representative, it costs my home buyers nothing to represent them and help to negotiate a best deal while looking out for their interests in every sale!

Hank Bailey’s 200+ Zillow reviews can be found at and visit the About Hank page at for more information and contact on Hank and how to find that perfect next dream home!

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