With more and more consumers searching on the Internet for substitute 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?

Let's start with the question of who decides how much a buyer's agent is received. Is the MLS listing a yardstick with regards to the fee of the buyer's agent? Absolutely not. Many people think it is, but the buyer agent commission is definitely not determined by the amount a seller is willing to contribute toward a buyer's agent fee.

Basing on the Buyer's Representation Agreement, in Texas that is, it is an agreement settled by the buyer and the hired agent. It is the buyer who agrees to pay the buyer's agent a certain amount, not the seller. It is instructed in the agreement that buyer pays the agent a specific amount, not the MLS Listing.

The buyer agrees to the 3% pay for our services as agreed upon on the Buyer Rep Agreement. We will receive that amount for our services regardless of the amount offered in the MLS listing, and this is explained to each buyer we work with. We will seek to obtain payment of the commission first from the seller, and have always succeeded in doing so, but if the seller is offering less than 3% to buyer agents via the MLS listing, our buyer will be responsible to make up the disparity or go for a another 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% commission for the buyer's agent. The seller on that listing offered 2.5% commission. In that incidence, we wrote up the offer to include the 0.5% gap in paragraph 12 of the sales contract, where the seller assents to pay some of the buyer's closing costs, and the seller agreed. The buyer was going to get another home if the seller had not agreed. So in this case, the seller gave the other 0.5% commission to the buyer, who in turned paid us the 0.5% gap at closing. Our buyer was not out of pocket for the gap and the seller didn't actually "save" anything by offering a 2.5%.

Do Realtors Avoid Listings That Pay Less Than 3%?

I find ridiculous the statement that agents will shun of the discount brokers' listing by consumer groups and others. I don't see how they can. When a buyer signs up with us, or any other Austin Realtor, we have the expertise to assemble an Internet search portal that informs the buyer via email each day of new catalog that match that buyer's criteria. Every buyer gets this same service from us but cannot say percentages other agents in Austin carry out the same, but it is a priceless tool for us and our buyers as part and parcel of the MLS System with no added cost.

The search engine is not knowledgeable about the commission amounts being tendered on any particular listing. Buyers can browse listings fit to their need. For those who say that Realtors evade or blacklist listings that pay less than 3%, that's garbage. The system does not allow sorting out and hiding buyers those listings.

When the buyer gets all listings and new ones that come up in the system about properties that go with their criteria they notify us and in return we show all listings of good candidate material.

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