Is it free to have a buyer’s agent?
I see other Realtor marketing material constantly that says it’s free to have a buyer’s agent, and that just absolutely isn’t true. Most people don’t realize that by saying this, they’re actually violating the code of ethics we take as Realtors. According to the National Association of Realtors Code of Ethics, “REALTORS® must not represent that their brokerage services to a client or customer are free or available at no cost to their clients unless the REALTOR® will receive no financial compensation from any source for those services. (Amended 1/22)”. So, as you can see, this just changed in 2022…but it’s been a year.
My Realtor told me it was free to have a buyer’s agent!
I’m sure they did. It’s a common ploy to get buyers if I’m being really honest. I hate that it’s so common, but it really is. However, unless it’s your mom or someone so close to you that they’d work for free, your Realtor is getting paid. You’re just not the one actually writing them a check as a buyer. Well, not usually, anyway.
So, while it isn’t illegal for a Realtor to say that their services are free as a buyer’s agent, it is against the Code of Ethics, which is voluntary. No Real Estate Agent is required to be a Realtor, so by choosing to become one, Realtors choose to take the Code of Ethics.
So how does my Realtor get paid?
How Real Estate Agents get paid is confusing to most people who have never bought real estate. Real Estate agents only get paid if their client actually buys the property. We get paid at the closing table (or a few days later, depending on the company) and are actually paid by the seller.
When a listing agent walks into a home to list it, part of the discussion is commission. The listing agent chooses what their compensation will be, typically as a percentage. This percentage is then split with the buyer’s agent. So, for example, if I was going to list a $650,000 home, I would ask for a 6% commission. That means I would get paid 3% at closing, and whoever sold the home as the buyer’s agent would get 3%. To break it down: $650,000 x 6% = $39,000. Divide that by two, and you get $19,500. That is the amount that the listing agent/seller will pay a buyer’s agent to entice them to bring a buyer. It is not free to have a buyer’s agent; buyers just don’t write the check.
How does this affect me as a consumer?
To be completely fair, this doesn’t really affect the consumer directly. Buyers don’t typically pay their agent, as the seller handles this in most cases. However, if a Realtor is willing to break the Code of Ethics in this way, I’d always wonder what else they would do. All in all, it is not free to have a buyer’s agent.