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Updated over 11 years ago on . Most recent reply

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Tyco Bronye
  • Minneapolis, MN
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Isn't commision for a buyer's agent based off total selling price a conflict of interest?

Tyco Bronye
  • Minneapolis, MN
Posted

I am not a seasoned real estate person so this may seem like a beginner question but I've not seen this talked about. It seems like a conflict of interest that a buyers real estate agent gets paid 3 percent of the purchase price. In the agent's interest they would want the price as high as possible right?

In my own experience I've made bids on personal residence houses with two different realtors. They both recommend I offer listing price. Of course they would do this because they make more money this way.

I see tv shows like Property Brothers and the buyer's agent brother's first impulse is to offer less than asking price on the house. This will actually make his commission less, why would an agent do that?

It would seem like a better idea to get a commission based on how much less you got the property for your buyer.

I'm probably missing something......seems wierd

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J Scott
  • Investor
  • Sarasota, FL
17,199
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J Scott
  • Investor
  • Sarasota, FL
ModeratorReplied

Yes, there is a certain amount of conflict of interest in how agent commissions work. That said, good agents realize that happy customers are worth more than 3% of a few extra dollars in sale price.

The most likely reason you're seeing agents pushing full-price offers is that they realize that -- especially in hot seller markets -- it often takes a full priced offer to get the deal. In other words, they're not trying to eke out an extra couple bucks by increasing the offer amount a few thousand dollars; instead, they're trying to increase their commission from $0 (if you don't get the house) to more than $0 (if you do get your offer accepted).

Just another reason why you need a great agent on your team, and not just an average (typical) agent.

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