Real estate brokers or agents usually represent sellers, and even in those cases where an agent takes a buyer from house to house, the licensee is obligated to each seller in turn.

However, it is possible for buyers to directly employ a broker or agent.

In most residential sales a broker is paid by a seller through an employment contract called a "listing agreement." This contract states, in general terms, that if a broker finds a purchaser who is "ready, willing, and able" to meet the sales conditions established by the seller, a commission will be due. In effect, a seller usually pays a broker on the basis of satisfactory performance.

In the case of a purchaser however, it is difficult to define beforehand the buyer's objective with precision. A house of a certain style, size, or price may be patently unacceptable for many reasons. Service becomes the main concern.

A broker should be able to provide a purchaser loyalty in the preparation of an offer, constructive negotiating skills, a good knowledge of the local area and housing values, plus current financial information and sources.

The broker's compensation should depend on the time required and the value of the broker's time. Also to be negotiated is a premium to the broker if the buyer is successful.

A reasonable arrangement -- recognizing that all fees are negotiable -- might pay the broker $45 per hour for professional services, with a minimum of $450. If a purchase is concluded through the efforts of the broker there should be an additional payment equal to 1 7/8 of the selling price. This premium will compensate the broker in part for lost opportunity benefits associated with representing the purchaser rather than the seller.

If you, as a purchaser, retain a broker, it is best to have a formal written agreement so that the details of the arrangement are fully understood. Such an agreement should contain a provision for binding arbitration under the rules of the American Arbitration Association -- in the event of a dispute.

Also, in making an offer, the role of the purchaser's broker should be clearly stated. The offer might note, for example, that "the undersigned parties acknowledge that XYZ Realty has been retained, and is employed as a consultant, by the purchaser(s) alone."

Generally, the broker should not receive compensation from the seller or their agent.