Why don’t home buyers pay their own agents?

Obviously, Bōde was created to empower home buyers and sellers to connect and transact directly.


But what about those people who want to use an agent to buy a property? And, what happens when Bōde buyers or sellers end up dealing with an agent on the other side of the transaction?  Wouldn’t it just be clearer if buyers who use agent services simply pay for them?

Let’s start with a little history

Back in the day, before the prevalence of technology and digital networks, there was a human network… and it was how homes were bought and sold. The seller’s agent would have a cooperating commission with another agent working for them that brought a successful buyer to the table. So, buyers agents were actually working for the seller’s agent… not the buyer. 


This makes sense right? The buyer’s agent’s interests are aligned with the seller agent. “Find me a buyer for the home and I will share my profits with you.” 

Now, fast forward a couple decades

With the prevalence of digital networks, 97% of buyers start the search for their next home online. So, in today’s world the majority of buyers are finding their own homes, and doing their own research. This has changed the home buyer’s journey dramatically given the convenience of online home shopping, they are now empowered to purchase the home they find directly without relying on a buy agent informing them of what is for sale. This means the seller agent no longer needs a buyer agent to bring potential customers to the table.

What hasn't changed? The fee structure

Today, the typical practice is for the seller to pay for both agents (unless of course the seller and/or buyer don’t use an agent).  There is also a common misunderstanding that the buyer’s agent is “free”. There are 2 main problems with this:

1. The buyer’s agent incentives are aligned with the seller NOT the buyer

Let me explain. If the buyer agent is paid a percentage of the agreed upon purchase price,  their incentives are to have the buyer pay more for the property not less. With this pricing mechanism, the incentive for the buyer’s agent is to push for a quick purchase, rather than take a patient approach in order to find the best home for the buyer.


When the fees are structured this way, the buyer’s agent’s incentives are completely misaligned with their customer – the buyer.

2. The buyer’s agent is most certainly NOT free

The buyer’s agent is not free, they just simply get paid by the seller. How much though? A LOT! 


As we all know the costs of selling a home with an agent is incredibly high. On a $1,000,000 offer (using a buyer agent) – the seller pays $17K in buy side commissions in Alberta. If you take into account the  commissions going to the buy side agent, then an offer of $1,000,000 is actually only $983,000 of proceeds going to the seller. 


Using the example above, from the buyer’s perspective, they could buy the home for $1,000,000 using an agent, or buy the home for $983,000 without using an agent, either way the seller would receive the same sales proceeds. Clearly the buyer’s agent is not free.

selling your home
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Guess how many mortgage payments you could avoid by reducing your purchase price by $17K? 15 months! (based on today’s mortgage rates). 

The Solution

  1. If the buyer elects to have an agent, they should pay them directly for their services just as lawyers, inspectors and appraisals are covered by customers procuring those services.
  2. Buy agent services should not be permitted to charge a % based fee, instead, it should be a flat rate ensuring their incentives are aligned with their buyer.

These two simple changes would totally change the equation for homeowners in Canada through transparency and education.  


It is time for change. 

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