Who Pays The Buyer’s Agent Commission When The Seller Pays Less?

Dear Phyllis,
I have been working with my real
estate agent for several months.
We made two offers that were not
accepted. Fortunately, our third
offer was accepted. However, the
seller agreed to pay our agent only
a 2% commission.

Then, just before closing, Escrow
informed us that we had to pay our
agent an additional 1% because
of the buyer-broker agreement
we had signed. This came as
a complete surprise.

Can you explain why we are responsible for
this additional commission?
— Confused Buyer

Dear Buyer,
I understand why this
caught you by surprise. The
rules surrounding buyer-agent
compensation have changed,
and these agreements can be
confusing.

First, when you signed your
buyer-broker agreement, it
likely specified the amount of
compensation your Realtor would
receive for representing you. For
example, if the agreement called
for 3%, you agreed to that amount.
However, the seller is not
necessarily required to pay any
of the buyer’s agent’s commission.
In your case, the seller agreed
to contribute 2%. Therefore, if
your agreement called for 3%, you
may have been responsible for the
remaining 1%.

Importantly, this does not
necessarily mean your Realtor
was asking for an additional fee
at the last minute. Instead, the 1%
obligation may have already been
part of the agreement you signed.
Escrow was simply following the
terms of that agreement when
it identified the amount due at
closing.

I can certainly understand your
frustration if you were not aware
that you could be responsible for
the difference. This is why it is so
important to discuss the buyer-
broker agreement carefully before
signing it. Ask what happens if
the seller offers less toward your
agent’s compensation.

Buyers should also discuss
this issue when making an offer.
That way, everyone understands
the potential cost before the
transaction moves into escrow.
I am sorry you felt blindsided
by this charge. There should be
no surprises at closing. A clear
conversation at the beginning
would have prevented this
misunderstanding.

Phyllis