I am often asked who pays my commission when a buyer asks me to represent them. Normally, in California it is the seller’s hired broker who agrees to pay the buyer’s hired broker a split of the commission that the seller has agreed to pay.
So if a seller hired a listing agent to sell their home for a 6% commission, the listing broker can agree to split the 6% commission with the real estate agent representing the buyer. Sometimes the split is in half, sometimes it can be more or less. The most common split is 60/40.
A lot of buyers don’t realize that they can have their own representation when buying new construction. In most cases the builder offers a commission or referral fee to the agent that registers the buyer. The key with new construction though is the Realtor must be there on your very first visit or the builder will not allow them to represent you and get paid. If you bring a Realtor to register you, make sure they are willing to go through all the important steps with you. (i.e. contract signing, design center, loan meetings, walk through, home inspection etc.) I always want to be there for my client to protect and advise them properly to the best of my knowledge.
In some cases if a buyer wants to buy a FSBO (For Sale By Owner) and the seller does not want to pay a Realtor whatsoever the buyer can choose to hire a Realtor and work out a commission with them. For example; I had a client that wanted to buy a house from an acquaintance. The seller refused to pay an agent and really wanted nothing to do with one. My client had worked with me in the past and wanted my representation to protect her regarding contracts, escrow, proper disclosures, contract time frames, and all her rights. We worked out a deal (commission is negotiable) so I would only represent her.
When hiring a Realtor to represent you in your purchase you should interview a few agents first. It’s not only about finding a house. That’s only the beginning. Someone that is full time, well educated in the area, very knowledgeable about contracts, buying “as is” , and contingency time frames is important as well.
When a buyer goes directly to the seller’s Realtor that is exactly what they’re getting…. the seller’s Realtor, Yes, they have a fiduciary duty to you but they also have a relationship already established with the seller’s. I hate representing both sides because I love fighting and protecting to the best of my ability for my client. If I represent both sides, I can only advise both buyer and seller and it’s between them.
You should have an experienced Realtor working with you throughout the home buying process. The seller in most cases pays the commission so there is no reason not to. Some will argue you pay for it in the price but I offer this. The market keeps that in mind, that’s why there are appraisals to make sure you don’t over pay. Also, if you have your own Realtor they can possibly negotiate the house down in price more than a seller or seller’s Realtor would for you. We are in a very challenging market right now and chances are you need someone on YOUR side.