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Many homebuyers are grappling with a new clause often found in buyer agent agreements: a provision stating the buyer agrees to pay a specific commission or fee, but any commission received from the seller will offset this amount. A common question is: How can you ensure the seller actually pays the agent's commission as agreed?
Key Changes for Homebuyers
Buyer Representation Agreements: Before engaging in property viewings, you'll likely be asked to sign a Buyer Representation Agreement (BRA). This document outlines the services your agent will provide and how they will be compensated.
Compensation Options: The BRA will specify your agent's compensation structure. This could include:
A flat fee
An hourly rate
A commission paid by you
A commission paid by the seller (if offered)
A combination of these
Understanding the Challenge
The crux of the issue lies in guaranteeing that the seller will fulfill their obligation to pay the buyer's agent commission. While the buyer's agent agreement outlines your financial responsibility, it doesn't directly enforce the seller's commitment.
Potential Solutions and Considerations
Leverage Contractual Obligations:
Clear Offer Language: Explicitly state in your offer that the seller is responsible for paying a specific commission amount to your buyer's agent. For instance, "Seller agrees to pay a buyer's agent commission of 2.5% of the sale price."
Contractual Enforceability: Once the purchase contract is signed by both parties, it becomes a legally binding agreement. Altering the commission terms without mutual consent constitutes a counteroffer.
Negotiate Directly:
Communicate with the Seller's Agent: Be sure your buyer's agent discusses the commission structure directly with the seller's agent to clarify expectations and potential issues.
Leverage Market Conditions:
Market Dynamics: A strong buyer's market can provide more negotiating power to secure favorable commission terms.
Consult with Your Agent:
Your buyer's agent should be familiar with local practices and can offer guidance on navigating the process.
*** Scenario: Buying a Home with New Rules
Imagine you're interested in buying a home in Phoenix, Arizona. You connect with a real estate agent, and they present you with a Buyer Representation Agreement. The agreement outlines a 3% commission to be paid by the seller.
You find a home listed at $450,000 and make an offer. Your offer includes a clause stating the seller will pay a 3% commission to your agent.
Potential Challenges:
Seller's Counteroffer: The seller might propose a lower commission rate. You can then decide to accept, counteroffer, or withdraw your offer.
Market Conditions: In a highly competitive market, sellers may have more leverage in negotiating commission terms.
Agent's Role: Your agent should advocate for your interests and negotiate on your behalf.
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Related Video:
Addressing Common Concerns
Refund for Overpaid Commission: If your buyer agent agreement specifies a 2% commission but you negotiate a 2.5% commission from the seller, the exact handling of the additional 0.5% would depend on the terms of your agreement with your agent. Some agents might offer to refund the difference, while others may retain it as additional compensation.
By understanding the potential challenges and implementing these strategies, homebuyers can increase the likelihood of securing the agreed-upon commission for their buyer's agent.
Disclaimer: This article is intended for informational purposes only and does not constitute legal or financial advice. The information provided should not be relied upon as a substitute for professional counsel. The authors are not real estate agents and cannot provide specific advice on individual circumstances.
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