Quote:
Originally Posted by frayedends
In Massachusetts there can be a contract with a buyers agent. If not there can just be an agent disclosure that one is acting as a buyers agent. If there is a contract it usually has a date set on it. Even if the buyer walks away from that agent but is under contract that buyer's agent will likely still get that share of the commission. Years ago this exact thing happened to me. I had a buyer's agent (It was my first house and I had no idea about these things). I walked away because I didn't like her. But she showed up at closing and got her money. She did nothing in the way of helping me except send me to the house the first time. But the basic ethics rules is that agent that had the contract has some rights via the board of realtors to that commission.
Even if there is no contract but that agent shows the buyer the house, that agent will get their share of the commission, regardless if the buyer then stops all contact with them. The first question an agent should be asking when they get a call from a buyer is, "Are you working with an agent." There are times buyers don't disclose this and it can cause issues with commissions.
ETA: This lawsuit will likely increase the amount of actual contracts between buyer's agents and buyers. Because it seems the buyers will have to pay their agent directly rather than from the proceeds of the sale. It doesn't really help anything. It becomes more complicated. Here's an example.
For easy math...
House is worth 500K. Old way, it is listed and sells for 500K. At closing the 2 realtors split the 25K commission (5%) that was set on the listing.
New way: Owner lists and sells for 500K. Seller pays their listing agent 12.5K. But the buyer is under contract to pay their agent 12.5K (obviously, this number is whatever they negotiate). But buyers don't always have thousands extra laying around at closing. So they will perhaps write an offer that asks for 12.5K back at closing. Similar to how buyers will ask for closing costs back at closing. In the end the seller took home 475K in both scenarios.
One benefit I could see is in competition among buyer's agents. If the commission is now set at the listing, the buyer can hire any agent. But if there is a contract with the buyer's agent that sets the commission, the buyer's agents can compete with lower commission/pay.
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I did not state my so-called "buyers agent" did not receive a commission. I said he did nothing to earn it. All he did was follow me around. He didn't even negotiate the terms. Without him, I would have just contacted the listing agent and finalized the deal with him. Easy, peasy! I did not need a middle man who took it upon himself to state that he was my agent. If I wanted someone representing me, it would be a lawyer or a home inspector.
I owe the agent following me around NOTHING. If the listing agent shares his commission with him, that is a separate deal that I AM NOT a part of.
Therefore, I never had a buyers agent. Just a man following me around waiting to get paid for merely showing up.
A buyer does not have to pay an agent. EVER! He or she can contact the listing agent and proceed from there.
IMHO, This is the ethical way for agents to sell homes. If a buyer approaches or contacts you wanting to see a property that IS NOT your listing, you must say so. Then immediately contact the listing agent and tell him that a buyer is interested in seeing his listing. 'When can you meet with him?" Is that too hard? If so, give the interested buyer the listing agent's contact information. Then say, "nice meeting you!"
I tried to explain this by using a car dealership as an example. A sales representative assists you while you are looking at cars in his shop. He does not follow you to every dealership waiting for you to buy. Then say, "Hey! You owe me commission! I am her agent." If this example sounds silly to you, then the practice of a buyer's agent is just as silly.
I hope the practice of a buyers agent is banned in all states. If banned, this will save sellers quite a bit of money by not having to pay high commissions.