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We've been working exclusively with a "buyer's agent". We have been told by him that he is representing US (the buyer's) and that is the difference between if he were working with as a broker's agent because then, his fiduciary responsibility would be with the seller's.
As our "buyer's agent" he is requiring 3%. The listing is a split with seller's agent getting 3% and buyer's agent getting 2% so we have to pay out of pocket the other 1%. We've been fine with this and we do feel he has helped us. However........
We are planning on signing our portion of the contract on this house tomorrow and our lawyer told us in his 25 years experience he has NEVER heard of a buyer paying out of pocket costs for an agent. If anything, the seller always would and why would we agree to this. The kicker is, we never signed anything with the agent. He is extremely professional but he has simply stated he trusts us. We believe we should fulfill our agreement and get him the 3%, but we want to know if this is appropriate on his end to ask?
I do sell real estate and in my experience the buyer's agent takes what the listing agent is offering. This is stated on the MLS form. Sometimes it is only 1.5 percent but usually it is 2 %. His fee is what it is but I am surprised that he did not have you sign an agreement about the 3% when he first made contact with you. Is it unheard of to have a the buyer who is being represented by a buyer's agent to have to pay out of pocket? No. What if the agent approached a homeowner for you who had their house on the market privately-a FSBO? Maybe that agent could get the homeowner to agree to pay him 3% inwhich nothing would come from your pocket because he cannot collect twice. If that homeowner did not want to pay him a commission, based on your agreement with him you would owe him the full 3%. I hope this info helped.
Usually, a buyer's agent will take what is offered by the seller, or have you submit an offer that specifies that the seller will pay the commission he is looking for. What is unusual is that he did not have you sign an agreement. He's taking a pretty big risk.
our lawyer told us in his 25 years experience he has NEVER heard of a buyer paying out of pocket costs for an agent. If anything, the seller always would and why would we agree to this. The kicker is, we never signed anything with the agent. He is extremely professional but he has simply stated he trusts us. We believe we should fulfill our agreement and get him the 3%, but we want to know if this is appropriate on his end to ask?
Tell your attorney that in most parts of the country IT IS UNHEARD OF TO HAVE TO SPEND MONEY TO HIRE ATTORNEYS WHEN IT COMES TO BUYING A HOME!
As for the buyer agent, why didn't you state that the buyer agent's fee would come from the seller side as part of your offer? That is how a lot of people use buyer agents without paying them out of pocket. Actually now that I reread what you wrote, it seems you do not have a contract with the real estate agent who showed you the house anyway.
If you never signed anything with him assigning him as your exclusive or semi-exclusive real estate agent I would say he is an idiot for thinking he can get away with charging you 3%. He should be happy with splitting the commission in the usual way real estate agents do because that is all he is entitled to legally.
When did he tell you about his 3% fee? Did he tell you this before he started showing you homes OR did he just think this up recently?
My buyer's agent said he wanted 2.5% when we signed with him. He let us know that 2% was common. We had a frank conversation - either way, since I was buying the house, I was paying the fee. But the seller writes the check. Here was the deal we made - If the sellers refuse to pay 2.5%, and the only thing holding the deal back was that .5%, my agent would agree to 2%. I told him up front I wasn't cutting a check for anything over the regular closing costs.
He ended up taking 2% to get a deal done - the seller's agent got 2% too.
Key was, we talked about these scenarios upfront.
So, do you have an accepted offer and you're about to go to contract? If that's the case, then the negotiations are over... you might be stuck if this is what you agreed to. Of course, if you move on to another house you can get a new agent or re-negotiate with this one if the deal bothers you.
If you're still haggling, and you're about to go up in price to make the deal, you might point out "well, if I need to go up in price, I can't afford to kick your commission up to 3%, if I go up in price to make this deal happen, can the agents agree to match commissions at 2.5% so we save the out of pocket?"
This would only work if you were ready to kill the deal if the answer is no.
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