Buyer pays part of broker fee?

Question

Hi all,

I'm starting to work with a broker on a potential deal at $80k, and from reviewing his "Buyer Agreement", I believe I would be on the hook for $1500 as a buyer:

(a)If the property is listed with a real estate company or licensee, BROKER will accept a fee equal to the fee being offered to cooperating agents; but in any event shall be paid not less than 2.500 % of the purchase/option price (or appraised value if an exchange) of the property, or a flat fee of $ 3,500.00 whichever is greater. If such fee, or any portion thereof, is paid by the Seller or the Seller's agent as a convenience of the transaction, then CLIENT will be credited by BROKER for the amount so paid and shall owe any balance due.

In the scenario here, 2.5% of 80k is $2,000, which doesn't meet the minimum $3,500 as stated above.  In this case, I would be on the hook for $1500.

Is this common?

Thanks!

Kevin

Russell Brazil · Answer

Yes in that instance you would be liable for a portion of the commission. Many agents will have a minimum that they will work for, so they either set a minimum price for the property they will service (Which is what I do) or they have a minimum commission set out in their agreement. Also keep in mind that all that money does not go to the agent. It gets split with the brokerage, then the business overhead, then with the government.

John Vo · Answer

@Kevin Eldridge The first rule of real estate is that everything is negotiable that means yes even a buyer agreement contract is negotiable. With that said, a good agent is worth their weight in gold and will steer you into the right investment property and bring you the right deals. Is your working relationship good with that agent? Is that agent knowledgeable about investment strategies as well as what your criteria are for your investment properties?