Recently I’ve had the same conversation with several prospective home buyers. It usually goes something like this:
“Anica I’d really love to have a Realtor help me find a home, but I’m just afraid that I can’t afford one.”
“Thanks for letting me know that Mr. Buyer. Would it help if I told you that in 99% of all real estate transactions the seller pays my commission? Which means that you have access to me & my entire team for free?”
“… Um, yeah. That might change things.”
I’ve had this conversation so often recently that it made me realize that although we work in this environment all day every day, the home buying process is still a pretty big (and usually intimidating) mystery for most people. And most of the time Realtor’s commission is the most confusing part. Please allow me to take this quick opportunity to address one of the biggest misunderstandings about my career.
Everything that I said in the above conversation is true. When a seller decides to list their property with an agent they agree upon a commission rate for that listing. That number varies based on several factors like the experience of the agent and the services they provide. For example let’s say that the seller agrees to pay a listing agent 7% of the sale price of the home. Once the seller has agreed to that 7% the listing agent determines how much of that 7% they will share with the buyer’s agent and that number does not change.
Some people will tell you that it is “cheaper” to use the same agent that has the home listed. At times yes this can save you money; however what you might save in money you could lose in negotiating power. Keep in mind that the listing agent has already made an agreement with the seller to get them the most amount of money possible for their home; in fact they have signed a contract agreeing to that. How can they also represent you fairly and negotiate the best price for you?
What does all of this mean for you as a buyer? It means that for the low, low price of absolutely nothing you have a professional in your corner. You have a professional that is assessing your needs, representing your interests, and guiding you through the entire process from writing an offer to negotiating possession; someone keeping you informed one step at a time. After all, if the seller has the home listed, they will already have a professional negotiating on their behalf, why not have one on your side as well?