For a long time, the residential real estate sector operated with the idea that, because the Seller was paying the commission, every agent should endeavour to get what could be seen as "the most money for the house." The concept really didn't bear analysis, however. Perhaps the Seller cut the commission cheque, but clearly it was the Buyer's money that made it possible. In recognition of this truth, Buyer Agency came into being, its purpose being quite different from the traditional one: to help a potential purchaser end up with "the most house for the money."
Nevertheless, the idea was far from being new. It had been a quite common practice in the ICI market for some time.
More to the point, though, it's now often becoming usual for payment to be made directly to the Buyer Agent when a non-residential transaction is negotiated. In fact, in the case of significantly priced properties -- when, quite frequently, a number of brokers work as a team to produce an offer -- it's even known for Sellers to stipulate that they expect the Buyer to handle the commission this way.
In any case, it makes some sense for the commission to be seen as an acquisition expense rather than part of the purchase price. It at least conforms with the way major corporate takeovers are managed: the fees paid to professional advisors are then seen as an entirely separate issue.
Who's representing who?
Of course, in relatively simple transactions, particularly when MLS properties are being handled, nothing complicated becomes necessary.
Nevertheless, although it's a fine point, there is an argument that the person who cuts the cheque does have some legal right to expect their interests to be served. The fact that there's a written statement that the Buyer Agent represents the purchaser and is looking for nothing except a share in the commision payable to the Listing Agent may, one of these days, not stand up in court. Attempts by the real estate industry to excuse itself from being beholden to the people who are handing it cheques for its services may, in fact, not be a good enough defence.
Meantime, some ongoing discussions within the industry are grappling with this aspect of agency. The outcome is far from certain, but it is possible to foresee separate payments to Listing and Buyer agents becoming an acceptable -- and accepted -- norm. After all, if real estate sales invariably call for two lawyers to close a transaction, each of them being paid by their client, there's really no reason why the industry shouldn't/couldn't follow suit, is there?
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This whole subject is rather contentious, although I make no apology for raising it. I strongly believe that exclusive buyer agents serve their clients far better than buyer agents employed by listing brokerages are able to do. But taking things to the next level -- and I'm implying in my remarks here that I view the prospect with real favour -- has so far only been taken under advisement by most of the real estate industry.
Indeed, I've yet to find any commercial agent website that deals with this topic -- or even makes mention of it. However, the residentially oriented page at http://homebuying.about.com/od/realestateagents/a/Whopaysagents.htm does discuss the main point and includes a prediction that commissions may end up taking the form of two direct payments, one each to the selling and buyer agents involved in a transaction.
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