Looking to buy a new home, what will it cost to have a Realtor help me?

This is a question that is far more common than one would think. In fact, given how inexpensive it is you would think that real estate agents would scream it from the roof tops so that everyone not only knew, but was tired of hearing about it. But about a third of the buyers I work with are surprised to hear what the fee actually is. Are you ready?

Working with a buyers agent doesn’t cost you a single dime!

How is that possible?

Well it is possible because of the way home sales are structured. When someone lists a house for sale, they contract with a listing agent. That agent is responsible to market the home and the full process of selling the home. When they write the contract they negotiate with the home seller for the amount they will be paid to sell the home. (The Giles Team at Your Realty Link has a simple 5% listing fee for homes over $125,000 for example). During that process they also determine how much of that listing fee will be paid to the agent who actually sells the home. This agent is referred to as the buyers agent or the selling agent and the portion paid to the selling agent is known as the buyers agency commission. Typically, that commission is evenly split between the listing agent and the selling agent.

So in short, the person selling the home pays both the listing agent and the buyers agent.

If you are paid by the home seller, don’t you work for them?

This can be a touch complicated, and as a result Indiana requires that we disclose our office agency policies at our first “substantive” meeting with a client. Here is a very abbreviated version.

If you are a customer, meaning you randomly called a real estate agent and asked a REALTOR to show you a house without a buyers agency agreement…that broker technically works for the seller, and is more obligated to their interests than to yours. They are still legally and ethically obligated (enforced by State law and their local Real Estate Board) to treat you fairly and honestly.

On the other hand…

If you are a client, meaning that you have met with the Realtor and they are operating under an exclusive agency agreement, then that real estate agent works for you. They are not just obligated to treat you fairly and honestly, but that legal and ethical obligation is now to consider your interests first and foremost. This is why any professional Realtor will sit down with you to have a buyers consultation prior to taking you out to see homes. We want to do more than shill homes, we prefer to provide a valuable service to clients and to actually help people have the best home buying experience possible.

But if the listing agent doesn’t have to pay a buyers agent, won’t they sell the house to me cheaper?

The short answer is a flat no. Like most things there is some nuance to this.

The reason this answer is no, is because the total commission the home seller pays is negotiated when the listing contract is first signed. While the selling price is negotiated by the listing agent, you have to remember that you are actually negotiating with the home seller themselves. They don’t have the contractual authority (unless there is an agreement to do so), to reduce the commission paid to the listing agent. So basically, if you don’t use a buyers agent and the listing agent handles both sides of the deal…that broker just has keeps the buyers agency commission and has a higher profit margin on this transaction.

Even in the rare event of a listing agent reducing the commission to get a deal done…chances are you will be paying more overall than you would if you had a professional Realtor negotiating on your behalf, and helping to navigate the rest of the process. This is because there are 10 different areas of our purchase agreement (again this refers to Greater Indianapolis and the MIBOR area), that can affect how much you pay for the home. Part of a real estate agents job, is to help you negotiate all of them instead of just he actual price paid for the home.

At the end of the day, I guess I have to correct my original statement. You not paying a dime for a buyers agent is not the correct answer. The correct answer is using a Realtor to help you find and purchase a home isn’t only FREE, it will likely save you money.

If you are interested in having me extend this service to you, so that I can help you find the home of your dreams while saving you money…give me a call at 317-657-8059 or shoot me an email at robb@yourrealtylink.com.

If you are thinking about selling your home, or if you would just like to know what your home may bring on the open market; fill out the form below and request a CMA on your home.
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About Robb

A husband, Dad to 5, and Grandpa to 9. US Navy Vet. 18 Year Postal Employee turned full time Realtor. I enjoy a wide variety of things, but you will find that here I mostly write about Indianapolis, government/politics, recent news, and whatever book I am reading or have just finished at the moment.
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