Are you interested in buying a home? Whether you are ready to buy your Dream Home, or you are a First Time Home Buyer you might be wondering How Much Does It Cost to Use a Realtor to Buy A Home?
I would like to answer this question for you and explain the home buying process for you. I also suggest you read my article “Path to Homeownership”.
What Does it Cost to Use a Realtor to Buy a Home?
Actually, this will vary by company. My company Nova Star Real Estate charges NOTHING to our buyers for our services. That right you will pay us $0. We don’t charge our buyers commission, buyers fees, document fees, administrative fees or anything else.
Almost every other company charges a fee to their buyers. Every company gives it a different name; Buyers Fee, Buyers Premium, Document Fee, Administrative Fee. These fees range from $250 to $1,000. This is in addition to all the other costs involved. All the costs to the buyer in a real estate purchase will start adding up quickly and it gets even worse when you are charged fees when not necessary.
How Does a Buyer’s Agent Get Paid?
You may be wondering; how does the buyer’s agent get paid then? The buyer’s agent will get paid by the seller. This is the case whether the buyer’s agent charges his client a fee or not. So, in other words the buyer’s agent is getting paid by the seller and still charging you a fee on top. It doesn’t seem right does it?
This is why you need to interview your agent before you agree to take them as your agent. Check out my Realtor Interview Questionnaire.
How Does the Seller Pay the Buyer’s Agent?
The seller will pay a commission when he sells his home. The amount of commission will be different in every location and brokerage. For an example lets use a commission of 6%.
The seller will pay 6% when he sells his home. If the listing agent sells the home to one of his clients his brokerage will keep all 6%. If a different agent sells the home then the listing brokerage will then have to split the commission with the other agent, usually (but not always) 3% per side.
So, it looks like this…
Listing Brokerage gets 3%
Buyer’s Brokerage gets 3%
The commission will be paid at closing as part of the seller’s closing costs. The actual amount of commission the agent gets will depend on his agreement with the brokerage he works for. Most of the time agents start with a 50/50 split with their brokerage.
So, the split would look like this…
Listing Brokerage 1.5%
Listing Agent 1.5%
Buyer’s Brokerage 1.5%
Buyer’s Agent 1.5%
Now that you fully understand how the commission works, I want to briefly explain the process of buying a home.
Find a Good Lender
This is where is should all start.
The preapproval process should be short. The loan officer should be able to get all your information check your credit and get your preapproved in less than one hour.
Decide on a Budget
You may not want to go all the way up to your limit. The lender will give you a maximum, but it doesn’t mean you need to use all of it.
Find a Good Local Realtor
This may be the most important part of the whole process. You will spend quite a bit of time with your Realtor. Make sure they are a good fit for you and that they are an expert in the type of property and location you are interested in.
Make a Needs and Wants List
Make sure you make two separate lists and have fun with the wants list. Remember you are looking for your dream home. For more tips on this read my article “How to Find Your Dream Home”.
Decide on a Location
This is another very import step in the process. Remember Location, Location, Location. You can not change the location of the property.
Research Your Desired Location
Do your homework. Look up schools, crime reports and even entertainment options.
Start Home Search
Finally, right? If you do all the previous steps first it will help you find your dream home faster.
Find Your “Dream Home”
I always tell my clients “When you find the right home you will know immediately”. I show a lot of houses and I hear buyers say things like “This could work if we…” Those are words of compromise. Yes, sometimes you need to be flexible but don’t compromise on the items that are on your needs list.
Make an Offer
This is both exciting and never racking. You really need to rely on your Realtor for this part.
Negotiate Purchase Price
This will be a smooth process if you hired the right Realtor. There might be some stress but let your Realtor guide you to through.
Hire a Good Home Inspector
Some inspections that you might want to consider are…
Home Inspection, Radon Inspection, Termite Inspection, Mold Inspection, Well and Septic Inspection, Find a Good Insurance Provider
Avoid All Credit Purchases
Don’t skip this step or you may lose your home.
Close and Move!
Congratulations! You made it! You are now a home owner!
This is just a brief description of the process to buying a home for more information check out my article “Path to Homeownership”.
If you have any questions leave me a comment here or send me an email.