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PDF Editor FAQ

When buying a property, why would you use a real estate agent these days (w/ listings on Redfin, Trulia etc) when you can get half the buyers agent fee (1.5%) back from a lawyer who handles your paperwork? Are real estate agents worth giving up $15,000 (for a 1M house)?

I'm not going to touch the legality of rebates or "refunds" on the buyer's agent commissions. Redfin, among others, does this and I'm sure they have legal staff that have vetted this issue. You can definitely use them or go it alone using Trulia as your info source (I'm partial to them since they offer super cool things like past sales history, crime maps, school ratings, etc. - and I work there).In short, chances are if you try and cut out the buyers agent you won't save any commission because the seller almost always has to pay the listing broker the full commission amount if there isn't a buyers agent and you, as the buyer, have no legal standing to say otherwise - I know...its harsh but trueHere are a few things worth considering.1. Who actually pays who - the complication of the listing contract. Theoretically, you could say either the buyer pays both agents, the seller pays both agents, or both buyer and seller pay their agent's half.Technically, at least in California, it is the Seller who pays both agents! This is due to how commission is defined in the listing contract and common trade practices used by agents. Usually, the listing agent enters into a listing contract with the seller and, at that time, negotiates the total commission to be paid - let's say 6%. There is a specific clause in the listing agreement used that then determines how much of the 6% total commission is to be paid to a "Cooperating Broker" - usually half, so Coldwell Banker gets 3% and the Cooperating Broker gets 3%.For example, a Coldwell Banker salesperson will, on behalf of Coldwell Banker, enter into a listing agreement with the Seller for a 6% commission and list price of $1 million. The Coldwell Banker salesperson, in drafting the listing contract, will then enter that they will pay the "Cooperating Broker" a "Cooperating commission" of 3% - half of the 6% total commission. When a buyer, represented by a salesperson working for Keller Williams, chooses to buy the property, Coldwell Banker will receive the 6% commission, then fork over half to their salesperson (after taking their cut) and send the other half to Keller Williams, who will take a cut before giving the rest to the salesperson who represented the buyer.SPOILER - this means, technically, the buyer has no ability to negotiate commission with the salesperson representing them because they are not DIRECTLY paying the salesperson representing them - the seller's Broker is. The only way to get around this is to sign an exclusive agreement with the buyer's salesperson AND the listing contract offers no cooperating commission (fat chance).2. The Mystery of Agency: What does dual agency really mean?Did you know that if you, as the seller, use a salesperson from Keller Williams and the buyer uses a different salesperson who also works with Keller Williams that it creates dual agency? Yup - its true. The "agent" is the BROKER of the Company of of the Office, not the salesperson (who is usually mistakenly referred to as the "agent")3. Lawyers, usually, have no idea about price or the market.Why would they? They don't do real estate sales for a living. Even in New York, where it is customary for an attorney to draft the contract, there is a Real Estate salesperson there every step of the way and who also gets paid. Why? Because real estate sales is their life and they know the market, values, how to negotiate the deal, and how to avoid pitfalls that cause deals to fall through. I'm not sure whether lawyers can collect commission unless they're license real estate brokers, which usually takes time to take the test, get results, and get the license...probably longer than you have to make the deal happen.4. But what if I just use the listing salesperson?Fair point - you may be able to just go to the listing salesperson and negotiate the total commission with them in return for them representing both you and the seller. The drawback is that they can't really help you negotiate the deal and have to deal with the legal quagmire of trying to serve to masters - you and the seller.Regardless, you really have no power to negotiate their commission in the first place and legally, they can just take the full 6% if you represent yourself or use them as your representative in the deal.

How does MLS listing works? Would they work in Brazil?

The MLS is a system by which all Brokers who are members cooperate to share listings and commission. The glue that holds the MLS together is the cooperation to share commissions because without it, a Coldwell Banker agent wouldn't get paid to sell a Keller Williams agent's listing, unless they were to get a separate written commission agreement with the buyer.The sharing of listings is also an important function of an MLS. Since te MLS is open only to licensed agents who are members of the National Association of Realtors (in most cases) agents are able to share private information about the homes like showing instructions. Having this data available to other agents makes it easier to sell the home.If you were to apply this model elsewhere, you would need a group of brokers with listings willing to abide by the rules set by the MLS to share listings and commission with each other an accept appropriate fines and fees in order to ensure compliance. You also have to set up the shared database plus front end access to the database where members and search, modify, and upload listings.

When a realtor shows me a place to rent, do I have to sign an agreement saying that if I get the place, I pay him some fee?

Generally the landlord has agreed in advance what fee to pay the Realtor. Works the same way when Realtors sell the house.See below article I wrote on how real estate agents get paid.So you are thinking about a career in real estate?Smart decision. The demand is there. According to the 2013 Profile of Home Buyers and Sellers published by the National Association of Realtors, 88% of buyers purchased their home through a real estate agent or broker. The income is reasonable. Real estate agents have a median income of $40,990 with the top performers making much more.Naturally your first question is "how does a real estate agent get paid?"SHORT ANSWER:Real estate agents work for real estate brokerages they earn money via commissions when they assist buyers and sellers buy or sell homes.LONG ANSWER:First let's go over some terminology.When brokerages hire real estate agents they typically set them up on what is known as a commission split. This means that when a commission is paid to a real estate brokerage it is split between the brokerage and the real estate agent. Some common commission splits are 50/50, 60/40, 70/30 & 80/20. This will vary from brokerage to brokerage and even from agent to agent. There may be a brokerage with 5 real estate agents who all have different commission splits.Generally speaking in any given real estate transaction there will be between 1 and 4 real estate agents or brokerages involved in the transaction. All of whom expect to be paid.Listing agent– This is the person that meets with a home owner who is interested in selling their home. This person works for a real estate brokerage. This person is then hired by the sellers to sell their home. The sellers signed a contract which explained the amount of money they were going to pay this listing agent's brokerage to sell their home. This contract is known as a listing agreement.Listing brokerage- All real estate agents work for real estate brokerages. Every real estate brokerage has a licensed real estate broker who is in charge of the real estate agents working at that brokerage. Some real estate brokerages you may have heard of are Keller Williams, Century 21 and The Holton-Wise Property Group etc... Every real estate agent you meet will work for a brokerage like one of those mentioned. The brokerage that employs the listing agent is the listing brokerage.Buyer's agent– This is the real estate agent that meets a person who wants to buy a home. Just like with the listing agent all buyer's agents work for real estate brokerages like Keller Williams, Century 21 and The Holton-Wise Property Group etc..This agent will show a potential home buyer homes that are listed either by themselves or other listing agents.Buyer's brokerage– The brokerage for whom buyer's agent worksIt is important to note that these roles can be different in each transaction. A real estate agent can be a buyer's agent, or a listing agent depending on the deal. A real estate agent can even be both the buyer's and seller's agent.Enjoying the article? Show your support by sharing it on FacebookLet's go over some different scenarios to illustrate how each of these agents and their brokerages get paid.Scenario A.A buyer wants to buy a home. She meets a real estate agent named Brian. Brian works for The Holton Wise Property Group. Brian is on a 60/40 commission split with The Holton Wise Property Group. Brian takes his buyer to a home that is listed by Carla. Carla works for Century 21. Carla is on a 50/50 commission split with century 21 and has been hired by the owners of a home on 123 Main Street in Cleveland, Ohio. The price this home has been listed at is $249,900.00 The sellers have agreed to pay the brokerage Carla works for 6% of whatever she can sell the house for.Brian and his buyer put in an offer on 123 Main Street for $225,000.00 That offer is accepted by Carla's sellers. Carla's brokerage is going to get paid 6% of the sales price by the sellers, but why did Brian take his buyer to Carla's home on 123 Main Street? Who is going to pay Brian and The Holton Wise Property Group?Answer: Carla and her brokerage.When Carla was hired by the sellers of 123 Main Street she entered their home into something called the multiple listing service (MLS) This is a website that real estate agents and brokerages use to help their clients buy and sell homes search for homes. When Carla put 123 Main Street on the MLS she offered all other real estate brokerages a share or split of the commission she gets from the sellers of 123 Main Street if they were able get their buyers to buy the house. In this situation Carla and her brokerage offered Brian and his brokerage 50% of the commission for the sale of 123 Main Street.So let's see how this whole thing played out.The house sold for $225,000.00 The sellers agreed to pay a commission of 6% to Carla's brokerage. That amount is $13,500.00Carla's brokerage agreed to pay 50% of the commission to Brian and his brokerage. Carla is on a 50/50 split with her brokerage and Brian is on a 60/40 split with his.Here is the breakdown of the commissions earned by all who were involved.Total commission paid by the sellers $13,500.00Total commission paid by the buyers $0.00Carla's commission $3,375.00Carla's brokerage commission $3,375.00Brian's commission $4,050.00Brian's brokerage commission $2,700.00Scenario B.As I stated before these roles can change by the deal. There is not always that many people involved in the scenario.Let's assume Brian's buyer did not like Carla's house. Instead Brian's buyer liked a house that Brian had listed himself. This house was also listed for $249,000. The sellers signed a listing agreement with Brian that paid him a commission of 6% of the sales price. Brian's buyer put in an offer of $225,000.00 that was accepted by the sellers.Here is the breakdown of the commissions earned by all who were involved.Total commission paid by the sellers $13,500.00Total commission paid by the buyers $0.00Brian's commission $8,100.00Brian's brokerage commission $5,400.00Did you enjoy this article? Show your support by Tweeting it.About the author:James Wise is the Broker and Owner of The Holton Wise Property Group, a real estate brokerage and property management company operating in the greater Cleveland, Ohio area.

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