"Klaatu Verata Niktor"

Before we read Osman’s piece on Buyer’s Agency, let’s do a little review.

Does the seller or the seller’s broker really pay the buyer agent’s commission? To suggest, as Osman does, that the buyer is getting a “free ride” (down the garden path), is too simplistic.


The day we envisioned that buyers would control their half of the transaction, we, the real estate industry, spent about 30 days toying with the concept. Then, in a New York Minute everyone turned on a dime and backpeddled to their comfort zone. That place where the seller and the seller’s broker controlled everything.

When you start talking about Buyer Agency in this Country, you might as well be spouting “Klaatu Verata Niktor”, as only agents seem to want to talk about it, while the general public’s eyes glaze over.

Buyer’s want a house, sellers want a buyer, and agents want to talk about agency.

Osman, buyer’s pay the buyer agent fee, not the seller. Unless we think of it that way, buyer’s will never be empowered in this Country, regardless of this whole data control “smoke and mirrors game” everyone is playing.

There are still many old curmudgeon rules in play, that prevent the buyer from truly controlling that fee, but let’s not suggest that buyer’s are getting anything for “free” please. The day the buyer takes possession and the right to pay a big mortgage payment every month, he starts paying for that fee in his monthly payment. The fact that he finances that fee, does not mean he doesn’t pay it…he pays it with interest!

Until we recognize this fact, buyer’s will remain Klaatu’s and will never become true Jedi’s.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000

6 thoughts on “"Klaatu Verata Niktor"

  1. Wow, Ardell. I didn’t know you spoke Jedi.

    Philosophy is one thing, reality often something else. The services of a buyer’s agent are NOT free but is the buyer really paying for it? It’s a matter of perspective. Ask a seller, and they’ll tell you THEY pay the commission.

    The seller is probably right, at least from a legal perspective. In Colorado, the seller usually pays commission to the listing agent who in turn compensates a buyer’s agent or transaction broker* who brings forth a buyer. See §18 of Colorado’s Realtor Board Approved Listing Contract. Of course, no buyer no sale… right?

    As I’ve said before, for most people a Buyers Agent is the best deal in real estate. There are usually no upfront fees and in most cases the seller has already negotiated, established, and will eventually pay your agent’s compensation*. If you’ve chosen an agent carefully, you get full service, expert advice, and representation.

    What’s full service? A Buyer’s Agent works solely on behalf of the interests of the buyer. Sometimes it’s the usual agent role of taking clients to see homes. In other cases, there is much more involved. For example, during the past few months I’ve been working with a client who is visually impaired. In addition to helping her get a sense of the market, look at many properties, and sniff out a very good deal, I’ve also spent many hours carefully reading and explaining contracts, disclosures, and other related documents. After renting for 20 years, she’s a first time buyer who is nervous about buying a home and I’m walking her through every step of the process.

    The alternative (in Colorado) is usually where the listing agent works as a transaction broker.

    Most buyers start their search online, looking at properties in places like my website. Eventually they may call a listing agent to ask about a particular house. If the caller buys the house they inquired about (rare), the listing agent will nearly always act as a transaction broker and collect both the listing agent and transaction broker/buyers agent commission. This is called “double ending” the deal. If the caller doesn’t buy that particular listing, the listing agent has an opportunity to act as a buyers agent for the caller for other properties. This is why listings, even when they don’t sell for long periods, are valuable to an agent.

    At the current time, Buyers Agents or Transaction Brokers in Colorado are nearly always offered 2.8% for their services by the listing agent (the “co-op”). Most FSBOs also offer a “co-op,” bif you happen to call one without an agent, it’s unlikely they’ll rush to discount their asking price. As I noted previously in my blog, some listing agents have started to offer higher incentives and even Plasma TV’s, while on certain high end properties the commission sometimes drop to 2.5%.

    For reference, here are the definitions of working relationships in the state of Colorado.

    *Note: Check your contract because there are alternative compensation compensation structures. With a buyer’s agent, you may be responsible for paying a commission. See §8 of the Exclusive Right to Buy Contract.

    Your Paduan Learner,

  2. However, as we are seeing from the Redfin model, the future may in fact be very, very different from the past.

    Why would a Transaction Broker make the same as a Buyer’s Agent? I was working in Florida when they outlawed Dual Agency and brought in Transaction Brokerage. It was a bear if the Buyer’s Agent was a Transaction Broker while the seller’s agent was “representing” the seller. It was not pretty.

    Oklahoma outlawed agency altogether…no one there is allowed to use the word “agent”.

    You are spouting what IS based on what WAS…but the present and future is a little more out of the box then that.

  3. You’re right, Redfin is a very good example of how the future for the industry will be quite unlike it’s past. But it’s also important to note the Redfin Connect (i.e Full Service) alternative. I wonder about their buyer breakdown and imagine, as more buyers become comfortable with the concept, they’ll see greater use of Redfin Direct.

    We continue to focus on creating value for our clients by being a full service, hands on real estate team. We’ve found most prefer an approach with the greatest personal interaction. For them, a house isn’t a commodity measured on square footage, bedrooms, and location. It’s a home for their family, a refuge, a sanctuary. Meanwhile Investor types, particularly of higher value properties, are often extremely time conscious and even more demanding of insight and analysis. They’re not going to drive around to open houses. Show them an analysis which supports a solid investment and they’ll gladly choose to work with you. For now, this is something that can’t yet be done by even the most cutting edge real estate 2.0 companies.

    My $.02

    p.s. I agree with you on transaction brokerage. It can become messy. As for why the TB is offered the same commission as a BA, perhaps it stems from to a consensus opinion that agents are performing similar functions while playing fundamentally different roles.

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