How Much Do Buyer Agent Services Cost?
If you have never worked with a Buyer Agent, you may wonder how much it costs to have your own representative help you with your real estate transaction. While there is a small transaction fee ($100) charged to my Buyers at closing, a Buyer Agent is typically compensated by the Seller’s Broker for bringing a Buyer to the closing table (whether it is NEW or EXISTING construction). The Seller enters into a contractual agreement with their Broker to sell the home with a specific compensation amount. The Seller Broker typically offers a part of that compensation to a Buyer Agent. I have never been involved in a transaction where the Seller’s Broker did not offer compensation to the Buyer Agent. If the Seller or their Broker do not offer compensation to the Buyer Agent, the fee (3.0%) will be due from the Buyer at closing. The fee can be negotiated a few different ways to have the Seller pay the fee at closing if the Buyer is unable to pay.
Keep this in mind: The Seller Broker is ethically and legally bound to protect the interest of the Seller and cannot offer you the services and protections a Buyer Agent can.
How Much Money Can a Buyer Agent Save the Buyer?
A Buyer Agent assists in finding a suitable home (generally the easy part). A good Buyer Agent will then perform a Comparable Market Analysis (the Seller Broker is not ethically permitted to perform this service for the Buyer) to determine the Market Value range of the home, and then negotiate a purchase price that falls within that Market Value (or below) to make sure Buyer is not offering more than the home could appraise for, especially when the purchase is contingent on the Buyer obtaining a mortgage. (This is where the Buyer’s Agent earns the bulk of their compensation.)
When it comes to buying a home, a good Buyer’s Agent will protect your interests and will save you as much money as possible. (I personally have saved Buying customers up to 15% off the List Price, throughout initial negotiations and continued negotiations during the entire transaction. The amount I saved all my Buyers is considerably more than the fee they could have paid at closing for my services.)
(The other ways a Buyer Agent saves a Buyer money is through 1. repair negotiations with Seller, 2. identifying permit, title or property encumbrance & encroachment issues and having the seller cure before closing, and 3. referring trusted service providers.)
How Much can a Buyer Lose without Representation?
The Buyer generally pays up to $750 to have inspection’s performed within the first 10-15 days after the purchase agreement is executed (the inspection period). If Buyer is getting a mortgage the Buyer will then need to pay for the Lender’s Appraisal ($500+/-) shortly thereafter. If the Appraisal comes back lower than the purchase agreement price the Buyer will either have to bring more money to the closing table to cover the difference, or the Seller will have to agree to lower the purchase price (sellers typically refuse to do this because the buyer has already agreed to pay the contract amount). If the Buyer does not have the cash to cover the difference, and if the Seller is not willing to reduce the sale price, the contract will have to be canceled. The Buyer will have wasted the cost of their inspection’s, the appraisal, and could potentially lose their good faith Deposit (1%-5% of Purchase Price) if their representative didn’t protect it. OUCH!
Representation is imperative to protect your interests!
You cannot afford not to hire a Buyer Agent to represent your interests when Buying a home.
Published on 2021-09-20 21:22:00
