Even though buyer agency has been around for some time now,
varying levels of confusion seem to exist concerning how a buyer
agency "gets paid".
We sometimes hear the following type of questions, even from other
real estate agents: "How do you get paid?", "Who pays
your fee?" or "Does it cost 'extra'?". Primarily
because of the simplicity brought forth by the fact that PRAEDIUM is
an Exclusive Buyer Agency, the answers are really easy to explain and
comprehend.
Represented buyers should have a clearly defined and WRITTEN
representation agreement with their real estate AGENCY. In fact,
Pennsylvania Law mandates it. The agreement should clearly state which
party the AGENCY represents, how much his/her fee will be, and how
that fee will be paid. We'd be happy to explain this in more detail
when we speak to you personally in our NO
OBLIGATION counseling session.
By way of brief answer to the above, over 99% of the time, PRAEDIUM
clients have had their contractual fee covered by the BAC (Buyer
Agency Commission) split. This is due primarily to the fact that
roughly 99% of what is for sale in Metropolitan Pittsburgh is listed
on the West Penn Multi-list, of which PRAEDIUM is a member. Hence, our
fee almost universally comes out of money a buyer would have paid
within the purchase price of a house, whether properly REPRESENTED by
PRAEDIUM or not.
Hence, in the above scenario, hiring PRAEDIUM need not cost
"extra". Remember, in fact, part of our mission is to help
you save time, money and aggravation in the purchase of a home.
However, since that BAC money at closing, as noted on the HUD- 1
form, can end up being distributed from "Seller's funds",
some people
do get confused. Don't be. It is very much related to the old
"chicken and the egg" debate. The sellers might argue that
they pay the fees because the closing attorney generally disburses
them from the purchase price at the closing, so they net less. The
better argument from the buyers is that the real estate fees inflate
the purchase price and are paid from money they bring to the table.
While real estate fees are transaction costs which can impact both
buyers and sellers, and are often financed as part of a purchase
price, the important issue is REPRESENTATION! No matter what
impression the new Pennsylvania Designated Agency Law might give you,
when you "hire" an individual agent to represent you in the
purchase of a home, you are actually signing a buyer agency contract
with the ENTIRE COMPANY of that agent. If that COMPANY also lists
houses for sale, you are setting yourself up for LESS than the
representation and Service you deserve.
Keep in mind this vital point: The source of the Agency's fee does
NOT determine whom the Real Estate Company represents. The
representation contract does. Because we are an Exclusive Buyer
Agency, our contract need not have loopholes and ambiguous clauses
which concern how to handle an "In House Listing". We would
be happy to provide you with a sample copy of our standard Buyer
Agency Contract for your review.
