Agent commission and making an offer

Dallas, Texas
Buying & Selling Real Estate
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Agent commission and making an offer

Sam M.
Rental Property Investor · Denton, TX · Member since 2015 · 8 posts · 1 vote

How does agent commission work now?  Haven't bought a property in awhile.

If I submit an offer, does the offer include the commission or not?  

If the seller is on a 2.5% with their agent and I'm at a 3% with my agent as a buyer, would the seller's agent ask for 3%?  Or vice versa.  

The commission can vary by agent.  I don't see the commission posted as it used to be on Redfin/Zillow.  (Am I missing something?)

What is the standard?  3% per agent, is 2.5% doable? 

Edit: For SFH

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Gregory SchwartzBusiness Member
Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
1y

@Sam M. Great question. The world of commissions has changed lately and here in Texas they keep us on our toes by rolling out new contract forms monthly. A few things to know:

- The seller will pay the seller's agent whatever they have negotiated. I don't see a scenario that you'd be paying their agent 

- There are 4 ways your buyer's agent gets paid (at least here in TX):
  1. The seller pays extra compensation to the listing agent who then splits it with your agent (this is the way most transactions were done before 2024. We now use a form call the "Compensation Agreement Between Brokers for this. Ask to see this form before you submit your offer)
  2. The seller directly pays your buyer's agent. 
  3. The seller pays you via seller concessions and you use that money to pay your agent
  4. You pay your agent at closing (think of it as an additional closing cost) 

Depending of the situation and of these options can be used by you and your agent to negotiate with the seller. Your buyers agent should be asking if the listing agent or the seller is offeringd buyer's agent commission split. Sometimes they have a pre-determined amount they are willing to share, sometimes they say they are willing to pay but the amount must be negotiated. 

You want to look at paragraph 12 of the Texas purchase contract, called the 'One to Four Family Residential Contract'. This is how you ask for the seller to pay your buyer's agent commission via the offer. 

Some agents are struggling to understand this new way of negotiating for commissions. If your agent can wrap their head around this you might want to look for new representation.

Good luck!
 

[email protected]443-812-0357
Schwartz Realty Group5116 Reviews
WebsiteView Page
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  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    @Sam M. Great question. The world of commissions has changed lately and here in Texas they keep us on our toes by rolling out new contract forms monthly. A few things to know:

    - The seller will pay the seller's agent whatever they have negotiated. I don't see a scenario that you'd be paying their agent 

    - There are 4 ways your buyer's agent gets paid (at least here in TX):
      1. The seller pays extra compensation to the listing agent who then splits it with your agent (this is the way most transactions were done before 2024. We now use a form call the "Compensation Agreement Between Brokers for this. Ask to see this form before you submit your offer)
      2. The seller directly pays your buyer's agent. 
      3. The seller pays you via seller concessions and you use that money to pay your agent
      4. You pay your agent at closing (think of it as an additional closing cost) 

    Depending of the situation and of these options can be used by you and your agent to negotiate with the seller. Your buyers agent should be asking if the listing agent or the seller is offeringd buyer's agent commission split. Sometimes they have a pre-determined amount they are willing to share, sometimes they say they are willing to pay but the amount must be negotiated. 

    You want to look at paragraph 12 of the Texas purchase contract, called the 'One to Four Family Residential Contract'. This is how you ask for the seller to pay your buyer's agent commission via the offer. 

    Some agents are struggling to understand this new way of negotiating for commissions. If your agent can wrap their head around this you might want to look for new representation.

    Good luck!
     

    [email protected]443-812-0357
    Schwartz Realty Group5116 Reviews
    WebsiteView Page
    3Reply
  • Preston DeanBusiness Member
    Realtor · Fort Worth, TX · Member since 2021 · 779 posts · 368 votes
    1y

    HI @Sam M.

    Welcome to our world. This is very frustrating now. Commissions are no longer viewable to the public because the thought was that agents were steering their clients to show homes with higher commissions 

    1. Commissions are negotiable

    2. As agents we will always ask the sellers to pay for our commissions so it doesn't come from our buyer clients

    3.You should have signed a buyers representation with your agent and that should have determined what % your agent is going to be paid. 2%, 2.5%, 3%. Whatever you agreed upon

    4. If you signed a 3% buyers representation agreement and the seller is only paying 2.5% and nothing more then just ask that your agent amend the buyers representation to 2.5% so you are not on the hook for the last %

    I will say, some agents are VERY strict and won't budge from 3% fee which in my opinion is kind of ridiculous.

    If you are my client and the seller is only paying a 2.5 % fee I won't ask you for the additional 0.5%. But that's me!

    [email protected]817-480-9452
    United Real Estate DFW Properties 565 Reviews
    WebsiteView Page
    1Reply
  • Sam M.
    OP
    Rental Property Investor · Denton, TX · Member since 2015 · 8 posts · 1 vote
    1y

    For list prices, what is the standard?  Do most of them imply the agent commission is included?  I understand there's potential variation, but from observation, whats being observed?

    0Reply
  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    In my market, we're seeing a shift from a pre-agreed upon % to provide to a buyer agent to sellers offering buyer agent compensation but leaving it up to the buyer to request how much. 

    [email protected]443-812-0357
    Schwartz Realty Group5116 Reviews
    WebsiteView Page
    0Reply
  • Diego AlvaradoBusiness Member
    Real Estate Agent · Flower Mound, TX · Member since 2016 · 296 posts · 139 votes
    1y

    Hi @Sam M.there are great answers on this post but I want to clarify something.

    In a real estate transaction most of the items are negotiable. There are best practices on certain items that provides a guidelines.

    Commissions are always negotiable like any other services, you can shop around for the best value for money.

    All depends on the risks that you are willing to take. Are you looking for guide and advise of an expert on the market or a pass through agen? You can find both and you can reduce the commission but you may need to do more work.

    More specific on your questions about price, that is also negotiable. Is the price calculated by the client alone, is the client taking the expert advise from the agent and doing all the homework?

    Real estate is transactional where people are involved so it won't be a black and white answer.

    The best to do is to find an agent that fits your needs and guide you through the process.

    [email protected]214-833-8911
    Alvarado Realty Group520 Reviews
    WebsiteView Page
    0Reply
  • Kristin Flores-Brockman
    Real Estate Agent · Fort Worth, TX · Member since 2021 · 142 posts · 59 votes
    1y
    Quote from @Sam M.:

    How does agent commission work now?  Haven't bought a property in awhile.

    If I submit an offer, does the offer include the commission or not?  

    If the seller is on a 2.5% with their agent and I'm at a 3% with my agent as a buyer, would the seller's agent ask for 3%?  Or vice versa.  

    The commission can vary by agent.  I don't see the commission posted as it used to be on Redfin/Zillow.  (Am I missing something?)

    What is the standard?  3% per agent, is 2.5% doable? 

    Edit: For SFH


     A simple answer: everything is negotiable and every agent runs their business differently. Some agents will not take less than 3% no matter what, others will adjust based on the deal. 

    I am a local Realtor and I work differently with my investors. I'd be happy to discuss further.

    0Reply
  • Christopher Davis
    Rental Property Investor · Boulder, CO · Member since 2019 · 144 posts · 72 votes
    1y

    Are there new trends in commission splitting resulting from the NAR lawsuit starting to emerge? And I suppose region by region?

    0Reply
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