Buyer’s Agent’s Commissions

I’ve written previously on the subject of buyer’s agency but since the Oregonian brings it up today in a nationally syndicated (but modified for Oregon) story on the front page of the home section, it’s good topic to revisit. The article “What Should I know About Buyer’s Agents” is correct is saying that in most cases, the buyer’s agent’s commission is built into the co-op listing agreement with the seller. The seller is under contract with the listing agent to pay commissions. Therefore, there is no cost to the buyer to have representation.

We need to stop here. The article says that the buyer’s agent may look to the buyer to pay commission on the rare occasion that a For Sale By Owner will not pay commission. That’s true. The article continues though by saying that an agent may choose not to show a home if the offered commission is too low. That’s wrong. The buyer’s agent would be violating their fiduciary responsibility to the buyer by not showing the home. Federal investigators are looking into the practice of “boycotting” listings based on the offered commission.

This is the second case where the buyer’s agent my look to the buyer for compensation. If the commission level is unacceptable to the agent (we recently saw one listing offering $100 for the transaction), the agent needs to have had the conversation with the buyer that the agent will only work for a minimum percentage of the transaction, what that percentage is and whether the buyer is willing to make up the difference. Hopefully all in writing with a buyer-broker agreement.

If the buyer says they will not make up the difference, then it is the buyer making the choice not to see the property even though it may fit their needs. It is not a decision an agent can make unilaterally.

Oregon law requires agent to discuss the agency relationships with a possible client “At First Contact” and to deliver the Agency Disclosures at that time. There should never be any question as to who represents who. Oregon allows for one agent to represent the buyer and seller but it is something that most agents (including us) won’t do to avoid liability and to fully represent their client.

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