Exclusive buyer representation agreement & buyer's compensation

[Monica Young]

I am just learning about real estate investing, and I recently met someone at a local real estate investor meetup that has been investing in real estate for 9 years. He recently became a real estate agent, and he knows our area well (Baltimore County MD). We talked and decided that he could help us find our first rental property to owner-occupy. He wants me to sign an exclusive buyer representation agreement that contains a clause for a 3% compensation to be paid to him at closing. Is that standard? Is it possible that all or part of that may be paid by the seller? Also, does exclusive mean that I shouldn't look at any properties without him being there after signing this agreement? I will also ask him these questions. I just wanted to come here to see what this community thinks.

[Russell Brazil]

Yes it is standard. You will not end up paying anything as the buyer as the money will end up being paid by the seller. The agreement in it has language that typically says the amount you offpay is offset by the coop fee offered from a seller. If the coop fee were 2.5%, he could technically ask you to pay the rest, but in reality it does not happen. If he puts 2.5% though and 3% is being offered, hes technically not due the full commission, so most people put 3% or per MLS. I typically write mine as per mls.

Being exclusive, you should only use your agent.  If you dont sign an agreement...then "your" agent would then act as a sub agent to the listing agent and will represent the seller technically. So they can still help you shop, but they would need to act in the best interest of the seller and not you.