JL's Columbia SC Real Estate Blog: Misconceptions on Commission

Misconceptions on Commission

 Lately I have started to hear a trend amongst buyers do to a misconception where commission is concerned. When a buyer purchases a home for sale in Columbia, SC or really just a bout anywhere for that matter, they realize that their representation from a Realtor is free for them. Sellers pay commission and that commission is split between the listing and the selling agent. If the listing agent represents both side, the buyer and the seller, then they claim the full commission for the transaction and their is no split.

 I have heard however, from more than one would be buyer lately, that even though their representation is free that the cost of it is passed on to the buyer. This is not the case at all. The commission is agreed upon prior to the home for sale being listed and it will remain the same regardless of whether there is more than one agent involved in the transaction or not. You will not get the home cheaper without your own Realtor, you will simply not have someone protecting your interests in the transaction.

 Regardless of the price that the home ultimately sells for, the commission is already a part of the listing. It will be paid as a percentage of the sells price once the home closes. The only difference is whether one or two agents get paid in the process. So in the end to keep it simple, when you chose to enter a transaction without representation from a buyer's agent, you don't save yourself money. You cost yourself representation.

 

 

www.jlboney.com

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JL Boney, III - Columbia, SC Realtor - Coldwell Banker Residential Real Estate

 I specialize in Columbia, SC real estate and the surrounding areas, including Blythewood, SC, Kershaw County, Fairfield County, and Lexington, SC. If you are in the market to buy or sell a home in Columbia, SC or any of the surrounding areas, I would love the opportunity to speak with to see how I can help. Thanks for reading and feel free to contact me if I can be of service to you.

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Comment balloon 9 commentsJL Boney, III • April 15 2009 10:33AM

Comments

Right on point here JL, a buyer gives up representation and gains ZERO advantage.  I try to explain the commission is in a separate contract from the buyers contract.  IT is a part of the listing agreement and it is spelled out clearly the sum the percentage and everything before the home is on the market.  A BUYER DOES NOT SAVE THE COMMISSION.  the split is just between listing agent and selling (buyers agent) If that is the same person,  WHO WINS?

Posted by South Austin Real Estate Blog (Sky Realty South Austin) over 9 years ago

Sellers often increase the asking price to cover the commission and that's why buyers think if they don't have an agent the seller will reduce the price.  What they fail to understand is that the full commission will go to the agent who is NOT representing them.    

Posted by Alyce Martin, Albuquerque - THE Place To Be! (The Realty Group, LLC) over 9 years ago

JL...

This post is an accurate depiction of reality. In the old days, if the buyer wanted representation, they would pay for it, and that was over and above the commission paid by the seller!

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 9 years ago

There are instances where it does cost the buyer. I had a Realtor who flipped a home and refused to pay my firm for my work. I closed on the home and the buyer is now on a payment schedule to the firm. The seller contacted my buyer at work (because she left their info on the sheet at the open house) and stated they would not pay me because although my buyer had representation they went to the open house without me. (Having 19 buyer's brokerage agreements at the time, this will continue to happen. I can not be 19 places at the same time. Buyers do wander around without us.) The first time buyer, not knowing any better, agreed to pay my firm during the phone conversation. This resulted in the seller refusing to budge on the issue and she had the HUD 1 changed at closing removing my firm. They also prepared a sales contract referencing the fact there was a sep agreement for the buyer to be responsible for the fees incurred in having a buyer's rep.

Some firms don't honor their listing contract regarding a co-broke regardless how hard you work. I took a lot of verbal abuse from the person who flipped that home. In the end I lowered the price significantly, which did not make her happy. We walked from negotiations, found a larger home for less but had our accepted offer canceled because the second seller took her home off the market. She couldn't find another place to relocate to. We wound up returning back to the original target because the home wasn't moving. Since then, I have instructed all of my buyers to always take my business card with them and to never leave their contact information behind for any reason if they get the urge to pull over and peek at a home. They are to write my name, e-mail and phone number instead on the guest sheets if they insist on traveling to an open house without me.

I have one set of buyers I may have to drop because they keep contacting the other side without me and I do not ever want to go through the nightmare of dealing with flip flopping brokers ever again.

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) over 9 years ago

Hi JL- As somebody that has to learn how the commission thing worked for realtors this is a very good post to understand how things work even more so. Thank you for your wonderful posts that always teach me something. Enjoy your Weds. <SMILE>

Posted by Sharon Lee, Retired and loving life (Sharon Lee's Virtual Assistance) over 9 years ago

JL ---- excellent point about the commission --- You are right on. I just hope a lot of consumers see it.

 

Mama Liz's Signature

Posted by Liz Loadholt, Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC (Liz Loadholt- AgentOwned Realty- Covering SC) over 9 years ago

JL - The myths of real estate as understood by free advise and misinformation. What if the house is overpriced and without representation you would have paid 7% more than it was worth. Even Lawyers hire Lawyers to represent themselves. Good post.

Posted by Claude Cross, Charlotte NC Homes For Sale (Homes By Cross, Inc. ) over 9 years ago

Gail- Some people just do not know how it works.

Alyce- If the house is listed, then they have already raised the price to cover commission.

Richard- Maybe, but who wants reality these days?

C- I see you had a lot to say on this one, and it sounds like you had a rough time with that whole ordeal. I have never heard of a case like this in Columbia, but I guess anything is possible. In order to be on our MLS, there must be an exclusive right to sell contract in place and the commission is agreed upon in that contract as well as the commission to be paid to a cooperating agent.

Sharon- You're very welcome, hopefully I will have a few more things to teach everyone.

Posted by JL Boney, III, Columbia, SC Real Estate (Coldwell Banker) over 9 years ago

Liz- I hope so too.

Claude- I had a friend tell me once that a lawyer who represents himself has a fool for a client.

Posted by JL Boney, III, Columbia, SC Real Estate (Coldwell Banker) over 9 years ago

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