Should You Use a Discount Realtor? - Part 1

With more and more consumers searching on the Internet for other sources for ways to sell their home, the discount Realtor is playing a big role in the real estate industry. The question is, is this really a good thing for consumers?

How Is a Buyer Agent Commission Amount Determined?

To begin with, who determines on the buyer's agent pay? Is the buyer's agent compensation decided by the amount presented in the MLS Listing? Absolutely not. Many people think it is, but the buyer agent commission is definitely not decided by the amount a seller is willing to put on toward a buyer's agent fee.

According to the Buyer's Representation Agreement, in Texas that is, it is a decision decided on by the buyer and the hired agent. Practically saying that the buyer pays his agent his compensation. It is the Buyer Rep Agreement that dictates the buyer agent's compensation amount, not the MLS Listing.

The buyer assents to the 3% pay for our services as agreed upon on the Buyer Rep Agreement. We receive the 3% without considering the MLS listing as explained to the buyer. We will endeavor to get payment of the charge first from the seller, and have always accomplished in doing so, but if the seller is offering less than 3% to buyer agents via the MLS listing, our buyer will be compelled to pay the difference or decide to pursue a different home. On the flip side, if the seller is offering a buyer agent bonus, or more than 3%, we rebate that to the buyer so that our motivations and advice can never be attributed to a commission amount.

So far this year with only one MLS listing out of 30 closed deals where a seller offered a 2.5% commisson for the buyer's agent. The seller on that listing offered 2.5% commission. In that case, we wrote up the offer to include the 0.5% gap in paragraph 12 of the sales contract, where the seller accedes to pay some of the buyer's closing costs, and the seller agreed. If the seller had not acceeded the buyer was ready to buy a different home. The 0.5% variance paid for by the seller provided the buyer to complete the 3% commission for us. Our buyer was not out of pocket for the gap and the seller didn't actually "save" anything by offering a lower commission.

Do Realtors Avoid Listings That Pay Less Than 3%?

The claim by consumer groups and others that agents will shun the listings of discount brokers is silly to me. I don't see how they can. Since we have the capacity to set up an Internet search portal, any buyer signing up with us or any Austin realtor gets informed through email each day of new lisitng matching their need. We do this for every buyer. I'm not sure what percentages of other agents in Austin do the same, but it's a priceless devise for us and our buyers, and it's given as part of our MLS system at no extra cost.

Search portals are not aware of the commission amounts tendered on specific listings. Buyers can browse listings suitable to their criterion. For those who say that realtors evade or blacklist listings that pay less than 3%, that's hogwash. The system inhibits filtering and hiding buyers those listings.

The buyer sees all listings that are available and matching their standard, and they often call us right away when an interesting one pops up new in the system, and we will show buyers any and all listings that they consider to be copnsidered good buys.

That is all I have time for now but look into part 2 of How Discount Realtors Work.

Article Source: http://www.real-estate-article-directory.com

This article was created by R. Chandler Smith, an accomplished real estate professional in the Austin and Central Texas area. He oversees Austin Texas Home Appraiser as well as Austin Home Appraisers

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