Breaking Down Commissions: Do Buyers Realize Realtors Are Free?

Most listing agreements state the seller will pay the listing agent’s broker an agreed percentage before home is listed.

Don’t you love water cooler talk?  Do water coolers even exist anymore now that bottled water has taken over the world?  The other day I was visiting with other compadre Realtors and one agent in particular was posing the question, “Do buyers realize that their Realtor doesn’t cost them anything?”

Learn a Big New Word

There is no promulgated (to make – an idea, belief, etc. – known to many people by open declaration :PROCLAIM ) form from the Texas Real Estate Commission regarding a listing agreement.

A listing agreement is a private contract between a real estate broker and a property owner.  However, most brokers have very similar listing agreements as it pertains to commissions paid from the seller at closing.

So how does this mean that Realtors representing buyers are “free?”

Everything is Negotiable — Even Realtors

Everyone wants a deal. Especially with the housing market in Dallas/Fort Worth slowing down a bit, buyers are excited about negotiating when it comes to purchasing their next home.

Many buyers think that they are better off just looking on their own; that engaging with a buyers agent will cause them to lose out on a “good deal.”

Buyers also think that by not using a buyers agent they automatically qualify for a 3 percent discount since 3 percent commission typically goes to the listing broker and 3 percent goes to the buyer’s broker.

Unless stated in the listing agreement between the broker and seller, this is 100 percent not true.

How Is That Possible?

A listing agreement (again: between seller and listing agent’s broker) is signed, and a sales commission is determined prior to the home being listed in the Multiple Listing Service. The agreement states that the listing broker is responsible for paying the buyer agent’s broker.

Stick with me here, I know it gets confusing.

Technically if a seller agrees to pay 6 percent in sales commissions and the buyer shows up without a Realtor and closes the deal, then the seller’s broker retains that entire 6 percent regardless of the negotiations of the home sales price.

In essence  the way most listing agreements are written – a buyer could come in and say, “I don’t have a Realtor, I want 3 percent off the price,” that is between the seller and buyer, and doesn’t affect the pre-determined sales commission.

If Realtors Are Free Then …

Use a Realtor. One hundred times out of 100, a Realtor is going to know about a property sooner, can act faster, knows the rules and regulations better, and is going to help make smarter buying decisions for all Buyers.

If a buyer can get the same “good deal” with or without a licensed professional Realtor … then why not use one?  Why not … they are free to buyers!

C’mon … this is a controversial topic and blog, and surely you have an opinion. Comment below! 

Well, that’s all from Tarrant County this week Dirty Readers.  Thanks for reading and following and sharing!  As always, if you have questions, comments or great ideas for a post … hit me up!

Seth Fowler is a licensed Real Estate Sales Professional for Williams Trew Real Estate in Fort Worth.  Statements and opinions are his and his alone.  Seth has been involved with the home sales and real estate industry in the Fort Worth area since 2004.  He and his family have lived in the area for over 15  years.  Seth also loves bowties!  You can reach Seth at: 817.980.6636 or seth.fowler@williamstrew.com.