Many people believe that the seller pays the commission in a residential real estate transaction.   Well, the fact is, while real estate commissions are normally disbursed by the seller’s attorney at the closing, the buyer is providing the funds for the brokerage fees as part of the purchase price, which is the source from which the commission check(s) is/are paid. 

Real estate commissions are built into the asking and final selling price of residential property listed through the Multiple Listing Service (MLS).  The buyer is paying these fees, which are included as part of the actual total purchase price.  If the buyer is buying a home through an ordinary seller’s agent, that buyer is not receiving agency representation or protection, but is still providing the funds for the commission to the listing and selling agents.  The listing and selling agents represent the interests of the home seller with legal duties to negotiate for the highest possible price at the best terms for the seller.  

When a buyer purchases a home through an exclusive buyer’s agent (EBA), most, if not all, of the compensation to the EBA is already covered, through MLS cooperation with the listing agency, so it usually costs the buyer no more to use an EBA than buying a home through any seller’s agency.  However, the buyer gets much more from EBA representation, including loyalty, protection, evaluation, verification, negotiation, and advocacy- duties and services that no seller’s agency acting as a ‘buyer’s agent’ can provide or guarantee.  This translates into savings in time, money, and effort.  These savings quite often can be very substantial. 

Exclusive buyer’s agents are Realtor members with the same access to visit any MLS listed property, just like any Realtor, and are typically compensated the same way as any Realtor- through the proceeds of the transaction.   EBA’s help to level the playing field for home buyers in what was, for many years, strongly tilted to benefit home sellers only.  The fairly recent move by the National Association of Realtors and various state Realtor associations towards sanctioning dual agency as an acceptable practice mainly benefits the financial interests of the real estate company.

Before calling the listing agent/company of a property you are interested in viewing, consult an exclusive buyer’s agent.  It will be one of the smartest decisions you make towards the purchase of your next home!