Why should you use a Realtor when buying a home?

There is a lot of confusion and misinformation about how using a Realtor to buy a home works and how the Realtor who represents a Buyer gets paid. This explains exactly how it works and why you really should use a Realtor when buying a home.

The seller is actually the one who pays the Buyers Agent commission.  Here's how it usually works:  The listing agent will negotiate with the Sellers and agree on a percentage of the homes sale price as compensation.  For illustration purposes, let's use 6%.  The listing agent has an agreement with the Sellers for them to pay 6% in commission when the house sells. This is not all for the listing agent, however - this 6% pays both the listing agent and the buyer agent. Now when the listing agent lists the property, they state how much compensation the Buyers Agent receives in the listing.  The norm in this market for a traditional sale is 2.7%.  So the Seller is the one paying the Buyers Agent commission - the Buyer is not paying any commission.

So what does it cost a Buyer to use a Realtor to buy a home?  There is one fee from the Realtor's brokerage.  It's called a Broker Commission, Broker Admin Fee, Broker Fee, etc.  It covers the brokers investment in the transaction, which is basically the payroll for the administrative staff that go through and process the completed purchase agreements, etc.  The fee is usually between $350-$425 and is paid at closing, either on the settlement statement or separately to the agent.

That is all a Buyer is going to pay for using a Buyers Agent.  If you chose not to use a Buyers Agent and had a lawyer draw up your contract, you would most likely pay more than that $350-$425 you would pay to your agent's brokerage.

Other benefits?  Your Realtor will have access to more information than you will and they will know how to interpret it. A big portion of the listings and information on the internet are outdated, sold, expired, canceled or just wrong.  You could spend hours looking at homes, find a few that you love and then find out they sold months ago.  Your Realtor has access to the most up to date information, as well as other information that doesn't show up in the public view of listings. To start the search, your Realtor can get your criteria from you and set you up on an auto search that will search for homes matching your criteria and email you new listings as they come on.

Another benefit - Your Realtor will know the market.  Besides personal experience, they have tools to look up comparable active properties, pending sale properties, and recently sold properties. They can then give you a good idea of what to offer on the property.  They also have experience dealing with Banks, Lenders and other agents.  They know the process and are an advocate for you when dealing with Sellers and their agents. They write up the offer with you, present it and negotiate until you come to an agreement. If there is an issue after the acceptance of the purchase agreement, such as something that you found in the inspection and want repaired before closing, they negotiate that with the Sellers Agent and make sure it is taken care of. They can guide you through the process, recommend lenders, inspectors, title companies, handymen to do work after the sale, etc and make sure you are comfortable with every step.  They provide their expertise and explain the different aspects of the purchase agreement, such as the different contingencies. 

Remember, this is their full time job (in most cases).  They provide valuable expertise, advice, contacts and negotiation skills in a major transaction for you.  Having an agent gives you an edge and will make the process and transaction much easier and less stressful for you!