Even though buyer agency has been around for some time, varying levels of confusion seem to exist concerning how a buyer agency “gets paid”. We sometimes hear the following type of questions, even from other real estate agents: “How do you get paid?”, “Who pays your fee?” of “Does it cost ‘extra’?”. Primarily because of the simplicity brought forth by the fact that PRAEDIUM Real Estate Services is an Exclusive Buyer Agency, the answers are easy to explain and comprehend. Represented buyers should have a clearly defined and WRITTEN representation agreement with their real estate AGENCY/COMPANY ( Remember, a buyer CANNOT contract only with the individual real estate agent).
The agreement should clearly state which party the AGENCY represents, how much the fee will be and how that fee will be paid. We would be happy to explain this in more detail when we speak to you personally in our No OBLIGATION counseling session. By way of brief answer the above, over 99% of the time, PRAEDIUM clients have had their contractual fee covered by the BAC (Buyer Agency Commission split). This is due to primarily to the fact that +/- 93% of all that is for sale in Metro Pittsburgh is listed on the West Penn Multi List, of which PRAEDIUM is a member.
Hence, our fee almost ALWAYS comes from money a buyer would have paid within the purchase price of a listed home, whether properly represented by PRAEDIUM or not. In the above scenario, hiring PRAEDIUM need not cost “extra”. Remember, in fact, part of our mission is to help you save time, money and peace of mind in the purchase of a home. However, since that BAC money at closing can end up being distributed from “Seller’s finds” on the HUD -1 settlement sheet, some people do get confused.
Don’t be. It is very much related to the old “chicken or the egg” debate. The sellers might argue that they pay the fees because the closing company generally distributes them from the purchase price at the closing. So, the seller nets “less”. The better argument from the buyers is that the real estate commission fees inflate the purchase price and are paid from money they bring to closing. While real estate fees are transaction costs which can impact both buyers and sellers (and are often financed as part of the purchase price) the important issue is REPRESENTATION.
No matter what impression the Pa. Real Estate Agency Law might give you, when you “hire” an individual real estate agent to represent you in the purchase of a home, you are actually signing an agency contract with that ENTIRE company (including the Broker of Record) of that agent. If that company lists even ONE house for sale, you are setting yourself up for DUAL/DESIGNATED Agency. Keep in mind this vital point: The “source” of the Agency’s fee does NOT determine whom the Real Estate Company represents. The representation contract does. Because we are an Exclusive Buyer Agency, our contract need not have loopholes and ambiguous clauses which concern how to handle an “In House Listing”.
Further, our initial contact term with clients is generally +/-30 days. Not a year. This gives you a chance to see how we work in a rather short amount of time. If all is well, we can simply extend the contract. We would be happy to provide you with a sample of the contract for your review.