Know The Critical Role of a Buyer’s Agent Contract

You know, we talk about getting paid as realtors.
Well, how does that actually happen? And who’s doing the paying?

Well, generally, the first step is that the seller signs a contract with the listing agent.

Let’s take, for example, 5% of the selling price.

So at 5%, then at that point, the listing agent will offer the buying agent half of that commission, which would be 2.5%.

Now, what happens is that today, the buyer’s agent is asking the buyer to sign a buyer’s contract.

And he will put in that contract 2.5%.

Why? Because what happened previously is that he called the listing agent and said, what is the commission being offered? And the listing agent said 2.5%.
So now the buyer, buyer’s agent, is now assured of making 2.5% of the sale.
So he has a contract.

He will then give that to the buyer.

So the buyer signs a contract, the seller has signed a contract, and basically it’s 5% of the sale going out.
However, where does that money actually come from?
Does it come from the seller?
Does it come from the buyer?

You know, when you think about it, the buyer makes an offer, the seller accepts it, Now the buyer, of course, closes.

The seller gets the money. So now he has these monies. Now they have to pay it out. So where did the money really come from?

Well, the seller is obligated to pay that 5% to the listing agent, who in turns pays the 2.5% to the buyer’s agent.

But none of it would have happened unless the house was sold and the buyer paid either cash or you got a mortgage.
So, just keep that in mind.

So don’t, buyers don’t freak out if you got to sign a contract because all that contract is guaranteeing is that they will get two and a half percent from the listing side.

And that’s my point.

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I'm Chris Berger and I'm sharing my 40+ years of experience as an NY & FL realtor, in home renovation & property management. Yankees fan. Concert goer. Dog lover. Granddad.

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