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I am the buyer.

My broker is having me sign a Exclusive right-to-represent contract. I am already not comfortable with exclusivity but if I go through with it there is a statement that says (paraphrasing):

Broker will attempt to negotiate payment for broker fee from seller, and if seller refuses to pay then the buyer must pay.

Now if I am 99% confident that the seller will pay the brokerage fee and I submit an offer on a house and it goes through and for some reason the seller won't pay the buyer broker, can I just not purchase the house?

I don't want to be obligated to purchase a house and then get stuck with 3% brokerage fees because the seller didn't want to pay them.

If the seller doesn't want to pay the broker, then I don't want to buy the house. Is there a scenario where I agree to buy the house, but then find out the seller won't pay my broker but now I can't back out of the deal?

Basically I never want to pay the buyer broker. I only want to buy a house where the seller is paying both broker/agents. I have enough fees with closing costs.

Updated, here is the exact statement:

In any transaction in which Broker is entitled to a fee, Broker's fee will be in the amount of 3% of the purchase price of property unless otherwise agreed to in writing. Broker will attempt to negotiate for the payment of this fee by the seller or through a commission-sharing agreement with the seller's broker and Buyer agrees to cooperate with broker to secure this payment from the seller. The parties recognize that the payment of Broker's fee by the seller is for economic adjustment purposes only, and should not be construed to mean that Broker is an agent of the seller. If the seller refuses to pay Broker's fee, or any part of Broker's fee, Buyer agrees to pay Broker the balance of the fee from the Buyer's own funds.

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    Can you edit and add country tag – Dheer Jun 5 '17 at 2:38
  • Refusing to pay any closing costs and requiring that they be paid by the seller is effectively the same as reducing your offer price. Like all contingency clauses in real estate transactions, being less flexible on your end may offer you financial protections, at the cost of being less competitive. – Grade 'Eh' Bacon Jun 5 '17 at 18:57
  • Don't let them push you around. If you complain, your agent will probably agree to pay it. My agent wanted me to pay the broker fee (which was $350) and I threatened to drop her and use Redfin. She immediately agreed to "waive it," which means she paid it out of her commission. Real estate brokers and agents make and modify contracts all day long. Agents make outrageous profit on each home sale. As the buyer you are the boss, not the victim. Until you sign a bad contract, that is. – farnsy Jun 6 '17 at 0:44
  • @Farnsy this isn't the real estate agent fee, this is the actual broker fee of 3% which is $6000 for a 200k house (in which the real estate agent gets their commission). I don't mind paying small fees but I thought it was always a given that the seller has 6% in fees (3% commission for buyer and 3% for seller). – ParoX Jun 6 '17 at 1:39
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    Ordinarily in the US, the real estate agent gets 3%. The broker gets a small amount (nowhere near 3%) that is called the "broker fee." Your case may be different. Just double check. You may be worrying about something that is much smaller than you are fearing. – farnsy Jun 6 '17 at 5:42
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That sounds like a particularly egregious version of exclusivity. However, the way that you could handle that is to include a "contingency" in your purchase agreement stating that your offer is contingent upon the seller paying the brokerage fee. The argument against this, and something your broker might use to encourage you not to do so, is that it makes your offer less attractive to the buyer. If they have two offers in hand for the same price, one with contingencies and one without, they will likely take the no-contingency offer.

In my area, right now, house offers are being made without very common contingencies like a financing contingency (meaning you can back out if you can't finance the property) or an inspection contingency. So, if your market is really competitive, this may not work.

One last thought is that you could also use this to negotiate with your broker. Simply say you're only sign this expecting that any offer would have such a contingency. If it's untenable in your current market, it will likely cause your broker to move on.

Either way, I'd say you should push back and potentially talk to some other brokers. A good broker is worth their weight in gold, and a bad one will cost you a boat load. And if you're in Seattle, I'll introduce you to literally the best one in the world. :-)

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Every situation is possible, it depends on what the contract states. According to Nolo:

Your ability to withdraw from a home purchase depends on two things:

1) the exact point at which you are "in contract" to buy the house, and

2) after you're in contract, what the contract says about terminating the transaction.

Therefore, you need to be 100% ready for anything to happen. After you sign the contract, it is binding and you must adhere to what the contract states. Buying a home is a big purchase - arguably the biggest of your life - you need to be comfortable with every aspect of this experience.

  • I will require that apart of the purchase contract the seller pays both broker fees. If they don't agree to that, I won't sign the purchase contract and therefore won't be "in contract" – ParoX Jun 5 '17 at 1:56
  • Hmm, so then perhaps you ask your realtor to remove that clause from his/her contract. – Michael Jun 5 '17 at 1:58
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I feel like you didn't actually read your agent's agreement, which should say where the money actually comes from. You sign it so that your agent can get paid by the listing agency from the net brokerage fees which the buyer pays.

In the United States, "real estate agents are prohibited from being paid a commission directly by the consumer." (citation: https://www.thebalance.com/how-do-buyer-s-agents-get-paid-1798872 ) The agreement will say exactly where your buyer's-agent's money is going to come from. Typically the listing agency receives the broker fees from the seller, and then pays both the seller's agent and the buyer's agent from that. It means both agents have to split the fee.

[If] for some reason the seller won't pay the buyer broker, can I just not purchase the house?

Pretty much, yes, though it won't be you saying "deal's off".

Unless they have some really unusual contracts with their OWN broker, if the seller refuses to pay fees, their own side of the transaction is going to fall apart and the sale won't happen at all, leaving you off the hook for your own broker's fee.

  • I updated the question to include the exact statement. The real estate agent and I both agree that 99.5% of the time the seller will pay the buyers broker. That is how the common "6% of fees" come into play for sellers, 3% for the buyers broker and 3 for the sellers. However, she said in the event that it is a house for sale by owner or if the seller refuses to pay the buyer's broker, then I will be responsible. – ParoX Jun 6 '17 at 1:44
  • Absolutely not true. 99.5%? Any FSBO she refers you to is suddenly an obligation for you to pay her a commission. I wouldn't sign such an agreement. – JTP - Apologise to Monica Jun 6 '17 at 1:49
  • I asked for her exclusivity be only 1 month instead of the 1 year the agreement was for originally. This paperwork only came involved when I was ready to put in an offer. I am fine with a 1 month exclusivity and I will have my purchase agreement contingent upon the seller paying the brokerage fee – ParoX Jun 6 '17 at 1:51

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