Congratulations! You’re about to join the ranks of homeowners all across the United States. But before you take up that mantle, let’s first examine the closing costs and realtor’s fees that are associated with your home purchase.
Who Pays the Realtor’s Commission?
Unless the buyer and seller voluntarily agree to different terms, the realtor’s commission is paid by the seller of the property. Commission rates can vary from a low of around 2% to as high as 6% or 7% of the total sale price of the home.
Often, there will be two real estate agents involved, as both the seller and the buyer have their own. Then, the two will split the commission, typically by 50%, although the brokers may negotiate different terms for the realtors.
For instance, with two agents involved on a half-million-dollar home purchase, with a commission of 6%, each agent would walk away with $15,000 on a 50/50 split.
What About Closing Costs?
Here is where it pays to be a strong negotiator. While the closing costs can rest with the buyer to cover, if your agent can swing it, they can arrange for the seller to cover the costs of:
- Surveys of the land
- Loan processing fees
- Title insurance costs
- Recordation fees
- HOA fees and taxes (pro-rated for the sale)
Since the closing costs can increase the cost of the home by 2% to as high as 7%, with an average of 3.5%, it is well worth the time to negotiate over the costs and who will pay what.
What Do Realtors Do to Earn Their Fees?
Your realtor works very hard to put you in the home of your dreams. They spend hours online, poring over listings. They check properties to ensure they aren’t in flood zones and physically inspect listings to make sure that they will pass muster with their buyers.
They market properties and spend their own funds on mail circulars, newspaper ads, etc. They cold-call homeowners to see whether they might be ready to sell and stage open houses so prospective buyers can view the properties the realtors have staged.
Sometimes, a realtor has to fix a problem when the purchase hits a bump in the road. They will negotiate solutions that are palatable to both sides and save a deal that was heading south fast.
For instance, Boston’s Coleman Group pride themselves on “remaining abreast of current market trends, home staging and preparation, land development, residential construction, and relocation trends.”
In short, even when they are not actively appearing to work, there is always something going on in the realtors’ pipeline that will bring you closer to your goal of homeownership.
Looking for a Home? A Real Estate Agent Can Help You
Real estate agents can put you in the home of your dreams. By working closely with your realtor, you can overcome hurdles and obstacles and turn your dreams into happy realities. Call an agent today to begin your home search!