Is your realtor on your side?(Money Magazine) -- When you're shopping for a house, it might appear that the friendly broker who listens to your needs, drives you around to showings and answers your questions is unflaggingly devoted to you.
Traditionally, sellers pay 6 percent commissions - 3 percent to their agent, 3 percent to the buyer's agent.
But with the market slowing, sellers are upping the slice going to buyer's agents.
In Livingston, N.J., Roseland Properties is offering 5% to buyer's brokers alone.
And in Las Vegas, where prices are expected to drop significantly in 2007, American Homes West has upped what it pays buyer's brokers from $1,000 to $10,000, with an added $5,000 if the agent gets the buyer to pay full price.
It's not just builders that are offering agent incentives; even individual homeowners, like Mohamad Khurram of Woodbridge, Va., are getting in on the trend. The reward for Khurram's $785,000 four-bedroom is 8 percent plus $5,000 - that's nearly $70,000 to just the buyer's broker - if the house sells at listing price.
Those increased commissions draw agents and, in turn, buyers. "People offer higher commissions because it works," says Spencer Barron, a broker associate at HQHomes in Denver, who says houses in his area with higher commissions tend to get sold faster.
Consumer advocates, however, fear that higher payouts mean buyers will be shown houses more in the brokers' interests than in their own. Even so-called buyer's brokers, agents who sign a contract saying they represent you, could be susceptible.
"It's tough to be objective when the reward for selling one house is much greater than the rest," says Joseph Fox, whose BuySide Realty in Chicago rebates the larger fees to buyers.
Not that you have any way of knowing if you're being shown houses that give the broker added reward: The National Association of Realtors does not require agents to tell buyers their potential compensation when they show a house.
Federal rules require the disclosure of fees at closing, but by that time it is often too late to pull out. There is some industry debate over whether parties should be required to come clean, but until it's resolved, you need to protect yourself.
Choose one of these techniques to help ensure that the house you're shown is the best deal for you, not your broker.
1. Go it alone
Finding a house yourself, rather than relying on a broker, is easier than ever. Realtor.com has extensive listings, and you can call listing agents directly to set up appointments.
Once you decide to buy, ask for 3 percent off your final price. Listing agents often try to collect the full 6 percent if a buyer is brokerless.
But you did the work; you deserve the rebate.
2. Set the fee
If you'd rather use a broker, have him put in writing what percentage he'll get paid and guarantee that it will be the same for every house.
Tom Early, spokesman for the National Association of Exclusive Buyer Agents, says to sign a contract before looking at houses. Stipulate that any bonus being paid by a seller be used to pay closing costs.
3. Put it in dollars
Eliminate all conflicts by getting your agent to agree to a set dollar fee rather than a percentage of the sale. That way your broker will have no incentive to show you overpriced homes or discourage you from negotiating the price down, since she'll get paid the same either way.