Buyers, when you make the decision to hire a Real Estate professional to work for you to help locate your new home, cottage or property, you likely will be asked to enter into a Buyer Representation Agreement.

In most real estate transactions, in its simplest form, it is the seller that pays the Brokerage the commission.  However, there is a provision for commission in a Buyer Representation Agreement as well…and you should know about it.

ReadingMost Buyer’s don’t even read this clause, yet you could end up paying commission, so, it is important to read and understand the implications.

As a Buyer, you are agreeing that the Brokerage is entitled to be paid a commission of a certain percentage of the sale (usually paid by the seller).  However, the commission clause further states that you, the Buyer, will pay any deficiency between what the seller pays and what the Brokerage receives.

What this means is:  If an agent enters a percentage say of 6% in this clause, and upon the sale to you of the property of your choice the Brokerage is only paid 3% commission from the seller…you could be on the hook to pay the deficiency, in this case 3% (ie of $300,000 that could be $9,000).

Another example is, if you enter into a Buyer Representation agreement with an agent with Brokerage A at 6%, and during the term of that agreement you purchase a property through another agent with Brokerage B, or you purchase a property privately, you could be obligated to pay the full 6% to Brokerage A (ie of $300,000, that could be $18,000).

You need to be diligent with your agent so that you fully understand your obligations.  Ask questions!  Many listings offer different commissions…make sure that you know what kind of commission the brokerage is entitled to on the property that you have chosen and what your commission obligation is (if any) before you sign an offer to purchase.  You may find it in your best interest to renegotiate this Buyer Representation before you sign the offer.

Unless you make very specific commission arrangements (ie on a private sale) with your agent, my solution is:  Have your agent stroke through the commission portion of this clause and include a statement that the Brokerage will be “paid by the seller or the listing brokerage as per the listing agreement”.  This way you will have a comfort level that you will not be paying any commission.

EducateDon’t get caught paying commission without knowing about it…you need to read, understand and negotiate this clause with your agent.  Don’t let it scare you—just be an educated buyer!

I’ll review other clauses of this agreement and other points of this particular clause in future Blogs.

Here’s the clause in its entirety:


Read before you leap!

Watch for my next Blog on….

Renting your Vacation Property

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. Kathy Dimaline is a Real Estate Broker for RE/MAX Grey Bruce Realty Inc.  The comments on this Blog are the opinions, only, of Kathy Dimaline and do not constitute any legal advice or legal opinion and does not represent the interests or opinions of RE/MAX Grey Bruce Realty Inc., brokerage.

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