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I'm buying a home and chosen a real estate agent and am now reviewing the buyer agency contract. One thing in particular about this contract has stood out to me. The buyer's commission is 3.5% stated as so:

Broker’s Fee, paid by Buyer to Broker, is as follows:
(a) In a purchase transaction with a seller represented by a real estate broker the fee is 3.5.% of the sales price OR
$2,000 , whichever is greater, AND $295
(b) In a purchase transaction with a seller who is not represented by a real estate broker the fee is 3.0% of the sales
price OR $2,000, whichever is greater, AND $295

which I think is high for the Pittsburgh area and a house in the $300,000 range, I expected 2.5-3.0%. I asked about this and they said that the sales commission is actually driven by the listing agent and is always split 50/50 seller/buyer and is always paid by the seller (maybe that part is PA specific). Meaning when an individual lists their house for sale they agree on the commission for both parties with their listing agent. In which case I don't understand why then this is even in the contract? Your thoughts?

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Keep in mind, common practice varies by state. Even within a state, one can negotiate fees. The commission isn't fixed. As an agent, who has worked with buyers, my agreement has no cost, I accept the split offered in the selling agent's listing. The way the contract reads, if a seller agent agreed to a lower fee listing, you are on the hook for the balance. If your agent is providing great service, they may be worth every penny. If they just want a fast sale, I wouldn't sign. The problem is, you might not know up front, so make sure there's an easy escape clause.

  • Are you saying that by this verbage, if I were to buy a house that was listed as 5% sales commission, the seller would pay my buying agent 2.5% and I'd be obligated to the other 1% myself as a buyer? In which case isn't it reasonable for me to request that this be changed into the contract to a more typical value, such as 1%? – DrTarr Oct 22 '17 at 19:49
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    That's how I read what you wrote. When I work with a buyer, my agreement has them pay nothing. Yours implies you will pay the difference. – JoeTaxpayer Oct 22 '17 at 20:37

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