Real estate transactions are incomplete without the inclusion of realtor fees. It is sometimes called by the name of the commission. But do buyers always pay them? The answer is no.
Rather, the realtor fee is included in the closing costs of the seller. So, instead of spending all the money to buy a home, a portion of the money is given to the realtors who make the buying process easy for you.
It is not necessary for the buyers to pay the realtor fee. They still look for out-of-pocket expenses like the down payment or earnest money in some cases. They also need to cover the closing costs.
Let’s find out more about do buyers pay real estate commissions.
Real estate brokers and agents charge a certain percentage to earn profit from selling a home. This percentage covers the services like assisting the buyer in locating a home using multiple listings services, and processing all the paperwork, to name a few. The process of buying a home becomes a lot easy with the help of real estate brokers. The total commission charged by the brokers is 5-6% of the selling price. And it gets split between the agents of the buyer and the seller.
Buyer’s agents are more interested in showing houses to their clients if they are likely to earn a good commission from the deal. So, the buyer can consider realtor fees as the marketing expense for the seller.
It has been found that buyers usually don’t pay the realtor fees. However, significant upfront expenses are included when you purchase a home. And the biggest one is the down payment. It could be between 3-20% of the home’s purchase price. Some buyers also like to pay the earnest money before closing the deal, which is generally between 1-5% of the price. Consider the norms in your location, as they could vary.
Keep in mind that earnest money is like a deposit that represents the good faith of the buyer and is not an added expense. It shows that the buyer is serious about buying the home.
Usually, the commission is not paid by the buyer. Instead, they are held responsible for the closing costs. The closing costs take many factors into account, like the location you live, the loans you have taken, or you will take for the home, and the interest rate. It is advisable to save 2-5% of the buying price to cover the closing costs.
Closing costs are categorized under seller concessions that aid the buyers in reducing the upfront cost while buying the home.
It is a common scenario to negotiate the closing costs with the seller. There are some cases where the seller bears some amount from the closing costs, or he could bear all of them.
While in others, the buyer might decide to finalize the high-priced offer. What is the reason behind this? In such cases, the sellers are willing to cover the closing costs.
It might happen that the buyer won’t pay the realtor fees. In cases like these, they might hold the eligibility of the commission rebate. You will be surprised to know that some brokers or agents share a part of their commission with the buyer and term it a rebate. Or it could be called a cashback reward too.
Almost all sellers and buyers take the help of real estate agents to simplify the process of buying a home. In exchange for their services, agents get a percentage of the selling price of the home into their pocket as their share, known as commission. After factorizing the cost into the listing price, the buyer is the one who tends to pay the cost of any real estate fees.
Don’t forget that commissions are always negotiable. If any customer is not able to pay the high fees, he/she has two options. The first option is to use the flat fee or the help of a discount broker. The other one is taking the help of reliable real estate websites. There are multiple websites that help potential buyers to search for their desired homes. So, always make the best choice and make your dream of living in a great home true.