Buyer’s Agent Compensation if Seller doesn’t pay?

Question

We have purchased many homes through the years but now we are focusing on purchasing an investment property. In regards to the house we are making an offer on...The same broker that is selling the home is who we are using to purchase the home. There are reasons behind this. My question is, we received the documents to sign, a portion is pasted below about commission. I understand it to say if the broker can’t get paid the 3% buyer’s agent fee from the seller, then we are responsible for it. (I may be wrong but that’s what I read it to say). The agent (who is new) said the seller has signed and agreement they are paying. I asked her to remove this portion then that we would pay if they failed to. She said this is a promulgated form and it can’t be removed.  While I realize chances are that the seller will pay the fees, I don’t want to sign something that says I’ll pay $6000 if they don’t. Thoughts??? TIA

Russell Brazil · Answer

This is simply how the real estate market works in the US.  If you dont like it, then dont use an agent.

Laura Luloh · Answer

Thanks all for your answers!! I contacted a realtor outside of our transaction and she said this typically comes into play if the agent showed us a “for sale by owner” or the seller of a house on the mls was only offering say 2%, then we would be responsible for paying the difference. But, since we are only using this agent to view 1 house and place an offer and the seller of that house is listed on the mls as paying 3% to the buyer’s agent, then we won’t  need to worry about paying any fees. Just FYI in case anyone else has this situation.

John Woodrich · Answer

I see a lot of closing statements each year and always cringe a little when I see a buyer paying realtor fees on top of a normal commission.  Half the time I wonder if they even know they are paying it...  In our area 2.7% is pretty standard on the MLS - seems the 3% verbiage is getting people.  I didn't see this much in the past.

Bill B. · Answer

@Russell Brazil

I may have misunderstood from the beginning. I understood the wording to be basically “in case the seller doesn’t pay what the listing says he’ll pay” (he welches/defaults on money owed). You’re talking about a listing that says the seller will pay nothing, or less than a standard amount? That makes more sense.

If the OP made this same mistake they can alleviate any worry’s by simply looking at the detailed listing and making sure the seller is offering a buyers commission?

Russell Brazil · Answer

I dont think its an east coast thing. A seller does not have to offer any cooperation fee. They can offer out zero. They can offer out any amount they choose. If a buyer hires an agent, the terms to which that buyer agent is paid is determined by the buyer broker agreement completely independent of what a seller offers. In most cases those funds comes from the sellers proceeds, but not always.

If the op is not comfortable with having to potentially pay an agent, then they should not hire one.

Plenty of times I have my clients pay me in addition to what I receive from a cooperating broker if what is being offered is lower than Im willing to work for. Probably 3 to 4 times per year, typically on lower priced transactions buyers need to come up with some money if they want to use my services.

Bill B. · Answer

@Russell Brazil

Thanks for the info. Could it be a recent change or an east coast thing? Do you get paid directly by title company or is there a way the seller could escape paying you? (If you were the buyers agent.)

Russell Brazil · Answer

Im licensed in 4 states and do business in another half dozen states, and in every single one a standard buyer broker agreement says a buyer will pay their agent X amount, and may receive a credit against that amount from what is received from a coop fee.

Bill B. · Answer

@Russell Brazil

Are you sure “that’s simply how the real estate market works in the US” Russel? I’ve never seen a line in any sales contract from any realtor that says I’ll have to pay the 3% commission if the seller doesn’t.

1st. How can the seller not pay it? Isn’t it take out by the title company?

2nd. You get to the closing table with every last dollar you need to close and then the title company says “ you need an extra $6 or $12 or $15k to pay the 3% sales commission because for some reason we didn’t force the seller to pay. Oh, you don’t have it? Guess the deals off, we can’t close. “

I don’t know how they would try to force you to respect a contract saying you would pay it AFTER the seller didn’t respect the contract and pay it. In the closing statements I’ve seen the seller never even handles the money that’s going to the realtors, the title company subtracts it from the net sale and makes checks out to their brokerages.

If you simply meant they’ll have to go with a different realtor if this realtor has forced something in that no one else does, forget everything I said, and do that instead. Maybe go with the listing broker and offer them both halves. Do you have it in your contracts?

Khanesia Washington · Answer

If the seller has an agreement with a listing agent that states the agent will pay commission for both buyers agent and sellers agent, you do not need to worry. TREC forms and contracts cannot be changed. Anthing that is added in special provisions, can be removed

Don Gouge · Answer

Agents will push you. Their job is to herd people. Nothing happens in a deal until the money is brought to the table. You are the one bringing the money. NEVER forget that!

Buyer’s Agent Compensation if Seller doesn’t pay?

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