Shannon’s comment on my previous post, Who Does Your Agent Work For?, brings up an interesting point. She thinks that buyer’s shouldn’t be represented by commissioned sales people. The more the buyer spends, the more the agent makes. That is therefore bad for the buyer.
I’m thinking a flat fee plus a bonus based on how far below whatever price I’m qualified for I actually spend. But that’s just one idea. On a commission basis, the closer I can be worked up to the most I can spend, the more money “my” agent makes. Does this really reflect my best interests?
I’m not sure that will work because what you are qualified to spend and what you want to spend are totally different things. It would have to be tied to the actual property that you decide to buy. But it does raise the question about how buyer’s agents get paid.
In today’s co-op transaction in most cases, the buyer’s agent commission is set by the seller and the listing agent. It is not negotiable. The buyer isn’t paying their agent directly. The agent has a responsibility to show all properties of what the offered commission is unless the buyer and agent have a Buyer/Broker Agreement where the buyer will make up the difference between the offered commission and the agent’s minimum “fee.”
Under the current co-op model, the buyer “pays” their agent but indirectly, it is built into the listing price. A potential new model has the buyer and agent entering into a contract before they see a single home together. The buyer knows exactly what the agent is making. The sales price theoretically drops by the buyer’s agent’s commission because the seller is not paying it.
How does an entrenched model change? Should it?