Buyers can negotiate with real estate agents about the commissions they will receive as compensation for a successful sale. You can and should.
The buyer pays for everything in a real estate purchase transaction. So why can't buyers negotiate the real estate agent's commission?
The short answer is simply: "Because that is the way it has always been done."
I don't like answers that run along the same lines as, "because I say so". So, why don't buyers negotiate the commission, really?
Well, the longer answer is just as unacceptable: "Only sellers are represented in a real estate transaction. The buyer has to fend for himself."
In South Africa, real estate agents usually represent the seller in a ral estate transaction. Buyers usually don't get represented at all. The only consideration the buyer's interests get from the sellers agent, is a "due regard" (whatever that means).
Real estate agents don't like to talk to buyers about their commission. (The don't even like talking to sellers about it!) They will often make buyers feel guilty and stupid for even mentioning the subject. Their favourite response, when a buyer raises the question, is that the commission is "something negotiated between the seller and the agent".
(The funny thing about commission negotiations is - when a seller raises the issue of commission with the agent, agents will often argue that "the buyer will effectively be paying the commission!", and hey presto! No more commission negotiations!)
Is this right? Is the agent's commission really a matter a buyer has no interest in? Lets consider this subject a little:
Who pays the agent's commission?
In South Africa, the real estate agent usually represents the seller, because the agent usually gets a mandate from the seller. The buyer usually only comes into the picture after the agent has started to market the property, in accordance with the seller's mandate. So under ideal circumstances, the seller would pay his/her agent whatever they agreed to pay, at the time of appointing the agent.
Unfortunately, the commission is deemed to be a part of the purchase price for the property. The agent's commission gets paid from the total purchase price. And the poor buyer pays the purchase price. So the buyer is actually paying the seller's agent.
I can hear the gasp from real estate agents already. Surely this reasoning must be wrong! So, just to make sure, let's reason this from the other side as well:
If the seller was not represented by a real estate agent, the buyer would have a certain price expectation for his property. The seller expects a certain amount of money "in his pocket", or he will not sell the property.
If a buyer chooses to appoint a real estate agent to represent his/her interests in the purchase and sale of the property, the seller would still expect to receive his asking price. But the agent's commission would be deemed to be part of the purchase price for the property, so the buyer would have to pay the seller's asking price AND an additional amount for the agent's commission, because the seller is not going to pay the buyers agent.
Does that make sense? Of course it does!
If a property gets sold, the buyer pays the agent's commission - whether that agent represented the buyer or not.
Buyers should negotiate commission.
Does the buyer have the right to negotiate the agent's commission?
If the buyer is paying the agent's commission anyway, it would seem only fair to deduce that the buyer has the right to negotiate how much to pay. But even if the real estate agent holds the view that the seller is paying his/her commission, the buyer has another good argument for negotiating the commission:
If the seller has the right to be represented by a real estate agent, then surely the buyer has the right to be represented as well? The buyer should have the right to appoint the agent of his choice, so that his/her interests will be represented properly. No seller (or seller's agent) can force a buyer to fend for himself in an intricate transaction such as the sale and purchase of immovable property. And just as the seller had the right to negotiate his/her agent's commission before granting a mandate, the buyer should have the same right.
If the agent proports to act as a dual agent, who will be representing both the seller and the buyer, then the buyer should still be able to negotiate the commission he/she will be paying for this (dubious) service.
The fact remains: Buyers have every right to negotiate the agents' commissions!
