Compensating buyer's agent if decide to buy home now renting? (commission, sale)

[sportsgal]

We relocated last summer for my husband's job. It was a quick move, so we decided to rent first and get to know the area before buying. We listed our old home and finally sold it about a month ago, so now we're ready to buy in our new hometown. We're meeting with a buyer's agent tonight and will probably use her services.

One of the homes we may consider buying is the one we're currently renting. The owner lived in the home for a couple of months after buying it but was then transferred out of town, so he simultaneoudly had it listed for both rent and sale when we leased it. I know he's very motivated to sell, and though we don't love the home, we feel like he may give us an incredible deal (especially if he paid a reduced commission or no commission at all) that we can't pass up. If we could get this home cheap enough, it would justify the remodeling/renovation expenses we'd incur to make this home ours.

I plan to let the prospective agent know that this rental home is on the table, but what should the compensation be if we end up buying this house after she's shown us others? There would not be a listing agent, so would she assume the duties of both listing and buyer's agent and be entitled to 6 percent of the sale? Or the 3 percent normally shared with the buyer's agent? Or a reduced rate if there's much less work involved than a typical sale?

We want to be fair and stipulate such terms up front, and I'm not certain how us buying the home we currently rent would affect her workload on our behalf.

Thanks for all the insightful advice and great information you all share on this site.

[chet everett]

If you feel you need an agent to represent you in purchasing a home that you are already renting it would be nice to let the buyer's agent that is a possibility, but the compensation is such cases is tricky. Generally the buyers agent is going to be paid out of the commission due to the listing agent according to an agreement the seller made. If there is no seller's agent that makes such payment kind of impossible.

You could agree to make an hourly compensation, which is generally pretty fair, but not really common in most places. Hourly rate generally will work out to be much less than a percentage, but realistically the workload is pretty limited when you deciide to buy a place you are already renting.

The other option that is ethically nice is that if you do end up working with an buyer's agent but not buying anything you can go out of your way to throw referred business back at 'em.

[WhoFanMe]

Kudos to you for being honest and up front with your propsective agent. All of the same tasks involved in buying your current rental will be in place with the exception of finding the home and you and the agent can agree upon compensation based on what services you are receiving.

[sportsgal]

Thanks for the advice. I did explain to the agent that there's a possibility of us buying the house we're currently renting if we look around and don't find a better deal or something we like a whole lot more. She was appreciative of our honesty and even said she'd check out comparables to the rental house and let us know what the rental house is worth. She merely asked for us to refer her if we did indeed buy the rental house, but we would definitely want to compensate her for the time she spends researching and showing us other homes.

So we'll cross that bridge when and if we come to it, but openly discussing the possibility made me feel even better about our agent. It feels like we're truly a team with the same objective--finding the best deal on a great house we can make our home.