An Agent is hired by a prospective Purchaser to find an acceptable property for purchase. The Broker/Agent represents the Buyer and negotiates with the Seller OR the Seller's Agent in the Purchaser's best interest.
Reference: Barron's Guide/2nd Edition - Dictionary of Real Estate Terms
Source of Commission does NOT determine Agency
Compensation can come from any source, provided that there is consent of ALL parties: the payment of a commission can be ONE factor used in determination of Agency, but is not the ONLY consideration:
Buyer Agents can receive compensation from a variety of sources: it is critical to avoid even the possible perception of a conflict of interest: Your behavior after the fact is very important lest your Client suspect that your loyalty has wavered or changed: a Licensed Agent must be particularly careful IF something of beneficial value OR the promise of something in the future is received.
One popular method for determining @ least
part of compensation for Buyer Agents is the Retainer Fee: this
fee can be refundable OR non-refundable: it can be credited against
the success fee OR the commission OR it can be refunded after
a short time: in some states, retainer fees must be deposited
in a trust account: check your state policies regarding retainer
Setting the Hourly Fee
Determine what the market will bear: can be graduated on the basis of experience & qualifications: A word of advise: do not underestimate your value! if you price yourself too cheaply, your Client may not believe you are as good as you really know you are!!
Fixed Flat Fee
May not vary with final sales price: can be the equivalent of the average selling percentage for a property in the Buyer's price range/can provide provisions for adjustments: charged for the provision of brokage services instead of a commission based on a percentage of the sales price of property: EXAMPLE: A Flat-Fee Broker charges $5,000.00 to arrange the sale of a home, no matter what price is agreed upon by the Buyer & Seller: Advice: IF a sale is not consummated within the term of the contract, no fee is paid!!
Simply a percentage of the sales price OR
the co-broke fee set in the MLS: Advice: straight percentage fees
can create a disincentive for a Buyer Agent and should be discussed
with your Buyer-Client to avoid any conflict of interests: Disclosure
and determine a solution to both you and your Client.
*Source: 2nd Edition/Gail Lyons & Don Harlan - "Buyer Agency"