Contracts and Commissions
Contracts and Commissions don't have to be the dirty words we have made them out to be. While any contract can be intimidating because it's legally binding and full of long and sometimes complicated language, signing a contract with your chosen REALTOR® protects both of you— whether you are a buyer or seller.
First and foremost, that contract creates a client relationship between you and your REALTOR,® which binds them to represent your best interests and allows them to act on your behalf (so long as it's legal). Once you sign the contract, your chosen REALTOR® will owe fiduciary duties to you (contact me if you want more information), which is just another way of stating they are looking out for you, your property wants and needs, as well as your bottom line. It protects both of you because you will be provided with someone committed to delivering professional services in an ethical manner who is there to make sure you are represented in your real estate transaction and it protects your REALTOR's® time.
The Buyer's Contract
Because the REALTOR® will devote such time and provide various services to you, including negotiating offers on behalf of the buyer and solve any potential problems that may arise, the contract protects him or her by requiring the buyer to work exclusively with that agent. In other words, if you choose to put an offer in on a property with someone else or on your own, you may still owe the contracted agent a commission based on the sale price of that particular home. However, this only poses a problem for the buyer should they choose not to have their contracted REALTOR® write the offer.
Otherwise, the services received are at no cost to you, with the exception of a small administration fee sometimes charged by certain brokers, as is the case with Edina Realty. That's right, you as a buyer do not pay your REALTOR® a commission. Not one cent. Any administration fee charged is paid directly to the broker, is related to paperwork generated and secure file storage. And, this fee is only payable upon closing of a property purchased. Exclusive professional representation to ease the process so you can focus on the fun and excitement of house hunting without a commission is another reason you will want to hire a REALTOR®. And, with no commission to pay, you've got nothing to lose. Now, there is one caveat—some agents do charge other fees or retainers depending on the type of representation. However, with exclusive representation this is not typical.
The Seller's Contract
Similarly, the seller's contract protects both you and your REALTOR® by creating a client relationship and allowing him or her to act on your behalf, represent your best interests, market your property, review and negotiate offers, as well as solve any potential problems that may arise. They also owe you fiduciary duties and they can often obtain a higher selling price for you than going at it alone. As a seller, however, in additional to a nominal administration fee for document generation and storage, there will be a commission. Keep in mind, if your property does not sell the services and marketing (paid directly out of the agent's own pocket) have been provided at no cost to you and no administration fee would be due. Often, as statistics have shown, a seller with a REALTOR®, is more likely to receive a higher percentage of their asking price—just another reason you will want to hire a REALTOR® .
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