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Why should a Buyer be Represented ?
Looking at a transaction from the Buyer’s side:
· The buyer brings the money to the closing table!.
In a typical real estate transaction involving one or more brokers, the buyer pays a total acquisition cost to buy the property. This is known as the “gross” purchase price. The gross purchase price includes the seller’s net proceeds, closing costs, taxes and fees and the brokerage commission. Thus, from the buyer’s point of view, the buyer is financing both the seller’s money and the brokerage commission in a total gross purchase price. In the case of two brokers being involved in the purchase, both brokers get paid a piece of the agreed upon brokerage commission that is clearly defined in the purchase and sale agreement.
Looking at a transaction from the Seller’s side:
· The seller brings the product to the closing table!.
In a typical real estate transaction involving one or more brokers, the seller never actually keeps the full amount of “gross” sale price. Instead, the seller keeps a “net” amount after the brokerage commission, closing costs, taxes and fee are paid. Thus, from the seller’s point of view, the seller is paying the brokerage commission from the seller’s gross sale price. As described above, when two brokers are involved in the purchase, both brokers get paid a piece of the agreed upon brokerage commission that is clearly defined in the purchase and sale agreement.
· No matter whether a broker works for the buyer or seller, you can see that the question of who pays the brokerage commission is a matter of opinion and interpretation. Most experts agree that the simplest way of looking at a real estate brokerage transaction is by looking at it as simple arithmetic.
What makes a Buyer’s total purchase price:
Seller’s “Net” Proceeds
Real-Estate Brokerage Commissions
Buyer’s “Gross” Acquisition Cost of Ownership
· With the majority of real estate transactions involving professional real estate brokers, buyers should employ their own exclusive buyer agent to assist them in locating, evaluating and negotiating real estate, without the fear of additional fees needing to be paid for buyer brokerage services. Remember that unless you specifically employ a broker to work for you by signing a buyer agency employment agreement, all brokers and salespeople represent the seller.
The Benefits of Buyer Agency
As you may (or may not) know, traditionally agents work “for” the seller in the real estate transaction, meaning that they owe their fiduciary responsibility to the seller of the property, not you, the buyer. Why? Because that’s just how the business has been done for years. You know that NYState Disclosure that you are asked to sign, and someone mutters “Oh, just sign here acknowledging that I really work for the buyer, it’s just a formality”. Well, at that time, you are signing away your rights to be represented in perhaps one of the biggest business deals of your life.
So, why hire a Buyers Broker to represent you?
We represent your interests, not the interests of the seller
· We have access to all homes for sale on the market
· We point out the strengths and weaknesses of the desired property, including market value
· We analyze current market data to determine an appropriate offering price, keeping your negotiating strategy in strict confidence
· We co-ordinate the interdisciplinary professionals involved in the home buying process (Attorneys, Mortgage Officers, Engineers, Seller Agents)
Will hiring a buyer broker cost me more money?
· In a standard real estate transaction, it doesn’t cost a home buyer any more to use a buyer broker.
Who really pays the real estate broker?
· Whether a real estate broker represents the buyer or seller, there is always a brokerage fee paid from a real estate transaction when a broker is involved. More often than not there are two brokerage firms involved. One broker usually works for the seller; the other broker works with the buyer. Both brokers typically share the commission in the form of a “co-broke” or “cooperating broker fee.” Because the brokers share the transaction commission, there is no additional cost to either the buyer or seller for using their own individual broker.
Serving The Hamptons, Shelter Island and the North Fork
631 725 0554 (o) 631 525 6000 (m) www.beachamptons.com