Typical Realtor Fees

[Chris51]

Are there typical fees that are paid by the buyer to the realtor. Coming from the midwest I have not seen this before.

[flipper]

3% for the listing agent, 3% for the buyers agent. By law, it's negotiable.

flipper

[grayhomes]

Realtor fees on both sides, i.e. listing agent and buyer's agent, are typically paid by the seller... like 99% of the time.

So, if you are a buyer and you have a buyer's agent.. and you are looking at homes listed on MLS vs. For Sale by Owner, then you don't need to worry about paying anything to your agent. The seller will pay it. Realtor fees are part of the listing agreement between the Seller and Listing agent.

[Chris51]

Realtor fees on both sides, i.e. listing agent and buyer's agent, are typically paid by the seller... like 99% of the time.

So, if you are a buyer and you have a buyer's agent.. and you are looking at homes listed on MLS vs. For Sale by Owner, then you don't need to worry about paying anything to your agent. The seller will pay it. Realtor fees are part of the listing agreement between the Seller and Listing agent.

That's what I am used to. I am being asked to pay a retainer fee up front, to be returned if I close on a house within 120 days. Also that I, the buyer would be reponsible for 3% of the cost to be paid to the realtor, if they cannot get it from the seller. Is this normal for the Houston area? I have never seen this on a contract before. The form says Huston Area Realtor Assoc. on it.

Thanks for all the advice everyone.

[TAK]

Do not have to pay a retainer fee for a buyer's agent. You can tell them you're not paying it and you can find another agent if they insist.

And for the 3% - tell them to kick rocks. If I were you, I'd walk away from this agent and their broker... There are plenty of buyers agents that wont even approach you with this...

I am a licensed real estate agent in Texas (inactive).

That "retainer fee" is to keep people from just riding around looking at houses... "Buyers are liars" is the saying. But if you're a serious purchaser, they won't care about the fee (except that more money is always desirable.)

The 3% from the BUYER is something i've never even seen or heard of. walk.

[CyKat]

That's what I am used to. I am being asked to pay a retainer fee up front, to be returned if I close on a house within 120 days. Also that I, the buyer would be reponsible for 3% of the cost to be paid to the realtor, if they cannot get it from the seller. Is this normal for the Houston area? I have never seen this on a contract before. The form says Huston Area Realtor Assoc. on it.

Thanks for all the advice everyone.

If the Realtor represents you, and the seller isn't going to pay, do you think your Realtor should work for free?

Sounds like a sound business practice to me. All he/she is doing is protecting him/herself. Nothing wrong with that, especially since it's agreed upon beforehand.

And yes, it's normal for the Houston area.

[CyKat]

Do not have to pay a retainer fee for a buyer's agent. You can tell them you're not paying it and you can find another agent if they insist.

And for the 3% - tell them to kick rocks. If I were you, I'd walk away from this agent and their broker... There are plenty of buyers agents that wont even approach you with this...

I am a licensed real estate agent in Texas (inactive).

That "retainer fee" is to keep people from just riding around looking at houses... "Buyers are liars" is the saying. But if you're a serious purchaser, they won't care about the fee (except that more money is always desirable.)

The 3% from the BUYER is something i've never even seen or heard of. walk.

The 3% from buyer has always been addressed in the Buyers Representation Agreement or BRA.

If I were a Realtor, I would not work with a buyer who would not sign one. Why would I want to risk wasting all my time and money helping to find someone a house, only to have them use their newly licensed brother inlaw, or just buy a FSBO. The Realtor AND the buyer have a decision to make at the start of their relationship. All Realtors are not desperate, although it doesn't take much looking to find one who is, if that's what you want.

Cykat, who loves his Realtor. he's married to her.

[diggity]

And yes, it's normal for the Houston area.

retainer fees for buyers agents are not normal in the houston area.

it would be nice if they were though

[jscarbor]

I've never used retainer fees for a Buyers agent.

That being said, its not a bad idea if you can get it. I just worked with a friend who had me go all around the burbs and he ended up with a new home where I did not get anything. I'm fine with it from him but that would irk me to no end if a real client did that.

[Chris51]

If the Realtor represents you, and the seller isn't going to pay, do you think your Realtor should work for free?

Sounds like a sound business practice to me. All he/she is doing is protecting him/herself. Nothing wrong with that, especially since it's agreed upon beforehand.

And yes, it's normal for the Houston area.

I thought that it was apart of the seller's agreement. I have been the seller before, and it was 7% commission that was divided between the seller's agent and the buyer's agent. But it came from my pocket, the seller, not the buyer. I get that. I just haven't seen it coming from the buyer before.

[dalparadise]

I'm guessing you're looking at "For Sale By Owner" properties or a lot of foreclosures if your Realtor wants a retainer. Either that, or (s)he doubts your qualifications to buy and wants to secure some kind of payment if a deal falls through because you cant get a loan.

In a standard transaction between two Realtors, the commission will be paid by the seller. The rate may not be the 3% your Realtor wants, but that information is plainly disclosed in the seller's agreement. So, if (s)he doesn't read it when you're researching the property, too bad.

As a former Realtor, I once sold a home (listing agent) on which I had only listed 5% commission -- 2.5% per side. I got an offer from an older Realtor representing a first-time buyer who loved the property and put in a full-price bid to lock it down. When I corrected the old guy's expected commission (he had expected 3% and we were well into the deal at this point) he accused me of being unscrupulous and said, "if I had seen that earlier, I never would have brought my client to you."

That's sad, but true. The only way I was able to get the listing price where it would sell quickly, was to reduce mine and the buyer's agent's commission. This put the home squarely into this first-time buyer's price range, which she eagerly bought. For 1/2% this other crotchety Realtor was willing to keep this home from his client, who loved it so much, she didn't even want to haggle on the price.

Talk about unscrupulous.

[CyKat]

I'm guessing you're looking at "For Sale By Owner" properties or a lot of foreclosures if your Realtor wants a retainer. Either that, or (s)he doubts your qualifications to buy and wants to secure some kind of payment if a deal falls through because you cant get a loan.

In a standard transaction between two Realtors, the commission will be paid by the seller. The rate may not be the 3% your Realtor wants, but that information is plainly disclosed in the seller's agreement. So, if (s)he doesn't read it when you're researching the property, too bad.

As a former Realtor, I once sold a home (listing agent) on which I had only listed 5% commission -- 2.5% per side. I got an offer from an older Realtor representing a first-time buyer who loved the property and put in a full-price bid to lock it down. When I corrected the old guy's expected commission (he had expected 3% and we were well into the deal at this point) he accused me of being unscrupulous and said, "if I had seen that earlier, I never would have brought my client to you."

That's sad, but true. The only way I was able to get the listing price where it would sell quickly, was to reduce mine and the buyer's agent's commission. This put the home squarely into this first-time buyer's price range, which she eagerly bought. For 1/2% this other crotchety Realtor was willing to keep this home from his client, who loved it so much, she didn't even want to haggle on the price.

Talk about unscrupulous.

Interesting. Because of your inability to negotiate your comission, or because of your desperation to secure a listing, the buyers agent had to suffer as well? Not always.

That's a perfect example of why a good buyers agent will secure a Buyers Representation Agreement. With one, in this case, the buyer would have to pay the other 1/2% . And this is a perfect example for the origional posters question, about when or why might a buyer be expected to pay a comission.

With out a BRA, a buyers agent would be ethically required to show all properties, regardless of compensation offered.

After securing a BRA, then it's the buyer decision if he wants to look at, and make offers on listings that have less than a 3% co-op offered.

So now you know, when you list with a so-called discounter, you may be shooting your self in the foot, if he's passing the discount on to the co-op agents, as dalparadise did.

Remember in a previous post I said that the Realtor AND the buyer have a decision to make at the start of their relationship.

If anyone would like to see a BRA, let me know and I'll have my wife send one your way.

CyKat

[TJones]

As a former Realtor, I once sold a home (listing agent) on which I had only listed 5% commission -- 2.5% per side. I got an offer from an older Realtor representing a first-time buyer who loved the property and put in a full-price bid to lock it down. When I corrected the old guy's expected commission (he had expected 3% and we were well into the deal at this point) he accused me of being unscrupulous and said, "if I had seen that earlier, I never would have brought my client to you."

That's sad, but true. The only way I was able to get the listing price where it would sell quickly, was to reduce mine and the buyer's agent's commission. This put the home squarely into this first-time buyer's price range, which she eagerly bought. For 1/2% this other crotchety Realtor was willing to keep this home from his client, who loved it so much, she didn't even want to haggle on the price.

Talk about unscrupulous.

So, you are saying that you wouldn't be reasonable and accept 2% instead of 2.5% to appease a realtor who was obviously an idiot, and didn't know how to read a listing ? Sounds like YOU risked losing a buyer for your client instead of him losing a house for his client.

[Chris51]

I'm guessing you're looking at "For Sale By Owner" properties or a lot of foreclosures if your Realtor wants a retainer. Either that, or (s)he doubts your qualifications to buy and wants to secure some kind of payment if a deal falls through because you cant get a loan.

In a standard transaction between two Realtors, the commission will be paid by the seller. The rate may not be the 3% your Realtor wants, but that information is plainly disclosed in the seller's agreement. So, if (s)he doesn't read it when you're researching the property, too bad.

As a former Realtor, I once sold a home (listing agent) on which I had only listed 5% commission -- 2.5% per side. I got an offer from an older Realtor representing a first-time buyer who loved the property and put in a full-price bid to lock it down. When I corrected the old guy's expected commission (he had expected 3% and we were well into the deal at this point) he accused me of being unscrupulous and said, "if I had seen that earlier, I never would have brought my client to you."

That's sad, but true. The only way I was able to get the listing price where it would sell quickly, was to reduce mine and the buyer's agent's commission. This put the home squarely into this first-time buyer's price range, which she eagerly bought. For 1/2% this other crotchety Realtor was willing to keep this home from his client, who loved it so much, she didn't even want to haggle on the price.

Talk about unscrupulous.

I am using an agent recommended to us by the company that hired my husband. We are intending to buy in the area and have stated that. We have only looked at homes that are on MLS listings, no FISBO or foreclosures, all within a general price range within what we can expect to pay. I do not know the area or the Texas laws reguarding the buying and selling of property, that's why I use a realtor, same reason I call an electrician. My question goes back to, is it usual and accepted practice for a realtor to require a retainer fee to cover their operating costs, and refund contingent upon purchase and closure on a house within 120 days. The second part of my question concerns who pays the commission, which I understand is generally 6% in Texas.

[missjanel]

No it is not standard practice for buyers agents to collect a retainer and the 6% commission is generally paid by the seller.

I am using an agent recommended to us by the company that hired my husband. We are intending to buy in the area and have stated that. We have only looked at homes that are on MLS listings, no FISBO or foreclosures, all within a general price range within what we can expect to pay. I do not know the area or the Texas laws reguarding the buying and selling of property, that's why I use a realtor, same reason I call an electrician. My question goes back to, is it usual and accepted practice for a realtor to require a retainer fee to cover their operating costs, and refund contingent upon purchase and closure on a house within 120 days. The second part of my question concerns who pays the commission, which I understand is generally 6% in Texas.

[dalparadise]

So, you are saying that you wouldn't be reasonable and accept 2% instead of 2.5% to appease a realtor who was obviously an idiot, and didn't know how to read a listing ? Sounds like YOU risked losing a buyer for your client instead of him losing a house for his client.

Why would I be interested in appeasing that Realtor? He had already submitted an offer on his client's behalf. The commission amount was clearly listed in the agreement. He had no recourse to rescind that offer. To do so would betray his client's interests. Why would I re-negotiate my commission after his offer was already submitted on my terms? Because he didn't read the listing?

You sell cars, right? After the deal's signed by both parties, is it common practice to re-negotiate your commission because your sales manager decides he wants a bigger piece of the action?

For what it's worth, I was passing the 1% entirely on to my client who was forced to sell in a position of very little equity in a neighborhood where he was overpriced. We reduced his asking price by that amount and got a buyer for him in a quick turnaround, allowing him to move out of state without any worries. I was trying to cut the guy a break. If it had taken my scaling back to 2% to get the thing sold and still offer 3% to the buyers agent, yeah, I would have done that. We decided to test that 2.5% split first, though.

He really seemed to appreciate the work I was doing for him and was even apologetic about asking me to reduce my commission. when I presented him with the 2.5% per side idea, he said it sounded like a great idea.

What are you looking for here?

One more thing: I was only a Realtor for about a year, while my industry (advertising) recovered. I sold 9 houses (4 as listing agent) and did quite well at it. I only discounted my commission that one time, for the reasons listed. I did do other things, like help clients fix rotten wood on their garages and re-do flowerbeds to help get houses ready to sell. Bottom line -- my responsibility was to that seller. I figured out a way to get his deal done quickly. I took care of my client and he was grateful.

And another thing -- had the buyer been forced to cover that 1/2% because of her Realtor's incompetence and I had found out about it, I would have gladly dropped my commission to 2%. I wasn't trying to put anything over on anyone. I worked harder at that job than anybody else I knew in my office. I was really trying to do a good job, because I didn't know how long it would take to get another job in advertising.

[CyKat]

No it is not standard practice for buyers agents to collect a retainer and the 6% commission is generally paid by the seller.

True, collecting a retainer is not a common practice for agents, but it's actually quite smart on the Realtor's part. Why should the Realtor be out the expense for YOUR home search if you don't end up buying? They're not tour guides after all.

CyKat

[Chris51]

True, collecting a retainer is not a common practice for agents, but it's actually quite smart on the Realtor's part. Why should the Realtor be out the expense for YOUR home search if you don't end up buying? They're not tour guides after all.

CyKat

I guess I feel the same way as when I go try on clothes, I don't intend to buy them all, but I do need to try on first, the same way I test drive many many cars before I plunk down big bucks, and the bucks are even bigger for a home, as is the commission.

[CyKat]

I guess I feel the same way as when I go try on clothes, I don't intend to buy them all, but I do need to try on first, the same way I test drive many many cars before I plunk down big bucks, and the bucks are even bigger for a home, as is the commission.

Nothing wrong with that. When buying our first home, my wife and I looked at about 50. Our Realtor was comfortable with investing that much time in us because she was smart enough to have us sign an exclusive Buyers Representation Agreement, and to have us get pre approved for a loan. In other words, she was a Professional.

CyKat

[dalparadise]

Nothing wrong with that. When buying our first home, my wife and I looked at about 50. Our Realtor was comfortable with investing that much time in us because she was smart enough to have us sign an exclusive Buyers Representation Agreement, and to have us get pre approved for a loan. In other words, she was a Professional.

CyKat

I also had Buyer's Rep agreements and pre-approvals for all my buyers. I never asked any of them for a retainer, though. I do recall one buyer client who asked to be released from my BRA, when he found a house and cut a side deal with the seller. Rather than fight him or be a jerk about it, I just let him out of it and moved on. I had as much business in that year as I could handle and I was most concerned with doing a good job for people. Was I less of a professional for that?

[Scott08]

To the original poster, none of the realtors(buyers agent) I know or have dealt with have contracts requesting fees or contingencies for themselves, their compensation comes from the seller. You should go find another agent, there are several very helpful ones who post here regularly.

[diggity]

a retainer may be a "good idea" in theory but it would be very tough to carry out in practice. With all the competition out there, why would a client pay a retainer when they could just move on to another agent?

I also had Buyer's Rep agreements and pre-approvals for all my buyers.

we've had an issue with a client going around us before. Came to found out the Buyer's Rep Agreement is barely worth that paper its written on. It's nearly impossible to enforce.

pre-approvals are a great idea though.

[CyKat]

Came to found out the Buyer's Rep Agreement is barely worth that paper its written on. It's nearly impossible to enforce.

Why do you say that?

CyKat

[diggity]

i'm not really sure why. i guess they're just not worded very strongly. Just because something is written in a contract doesn't make it easy to enforce. Non-compete clauses used to be the same way.

After talking to our broker, he basically said all we could do is demand the other broker pay us the commission. After the other broker refused, it was up to us to take them to court.

After consulting with a lawyer, it was determined not to be worth the hassle as you rarely win and it's tough to collect even if you do

[ssmallen]

Are there typical fees that are paid by the buyer to the realtor. Coming from the midwest I have not seen this before.

My Realtor has never even asked me to sign anything (before making a offer on a home), much less pay her anything. We've used her for 3 purchases and according to the paperwork after close, she only got 2% for the last one (3% went to the listing agent). She didn't seem upset at all, considering we only looked at 8 houses it was still a decent payday for her and her broker.

[dalparadise]

i'm not really sure why. i guess they're just not worded very strongly. Just because something is written in a contract doesn't make it easy to enforce. Non-compete clauses used to be the same way.

After talking to our broker, he basically said all we could do is demand the other broker pay us the commission. After the other broker refused, it was up to us to take them to court.

After consulting with a lawyer, it was determined not to be worth the hassle as you rarely win and it's tough to collect even if you do

The two brokers who represent the agents involved are the ones responsible for ensuring the contract between them is handled equitably. Those brokers are both governed by the National Association of Realtors and TAR. their livelihoods depend upon those contracts being executed properly, as any broker who tries to pull a fast one on another could lose his license and his affiliation with NAR. Doing so would prevent him from practicing his business.

So, while the contract is negotiated between the two parties, it's actually a contract drawn by the two parties and executed by the association. Once it's on paper and the deal is properly negotiated, it's rare that it gets changed on whims such as a Realtor wanting more commission. Typically it takes a force described within it to alter it, such as lack of financing to alter it.

That's why Realtors must be good on the front end of drawing up and negotiating the contract. Some choose to go for retainers, which is fine, but not common in Texas.

[diggity]

Those brokers are both governed by the National Association of Realtors and TAR. their livelihoods depend upon those contracts being executed properly, as any broker who tries to pull a fast one on another could lose his license and his affiliation with NAR. Doing so would prevent him from practicing his business.

this is all true, but TREC, TAR, and NAR aren't the best about weeding out the bad brokers. There's one particular broker? in town that is notorious for having complaints filed against him. Somehow, he's still heading one of the most active offices in town.

[ssullivan]

My Realtor has never even asked me to sign anything (before making a offer on a home), much less pay her anything. We've used her for 3 purchases and according to the paperwork after close, she only got 2% for the last one (3% went to the listing agent). She didn't seem upset at all, considering we only looked at 8 houses it was still a decent payday for her and her broker.

This has been my experience as well working with a couple of Realtors in Houston as a potential buyer. They never asked me to sign anything or pay any sort of retainer, despite looking at a variety of properties and not buying anything. And I've had a similar experience recently with the purchase of a condo in Atlanta. Our Realtor there never asked us to sign anything until we were making an offer on a place that we're scheduled to close on next week. And in that transaction the commissions are being fully paid by the seller.

If a Realtor ever asked me to pay a retainer as a buyer's agent, I'd find another Realtor. Same thing if one asked me as a buyer to pay up the commission if the seller had negotiated something lower than the standard 6%.

[dalparadise]

this is all true, but TREC, TAR, and NAR aren't the best about weeding out the bad brokers. There's one particular broker? in town that is notorious for having complaints filed against him. Somehow, he's still heading one of the most active offices in town.

If it's the one I'm thinking of, I heard he gets around this by being the owner of the office and actually employing his broker as his boss. Thus, the slimy guy is merely a Realtor in the equation, with a puppet regime.

How that shields him from trouble, I don't know. But it sure is clever.

[diggity]

If it's the one I'm thinking of, I heard he gets around this by being the owner of the office and actually employing his broker as his boss. Thus, the slimy guy is merely a Realtor in the equation, with a puppet regime.

How that shields him from trouble, I don't know. But it sure is clever.

This is all true.

Even more sinister was the fact that he employs the (former?) head of the TREC Broker/Lawyer Committee as his broker. This way he knows exactly how far he can bend the rules without fear of reprisal.