The other day I was in the car with a good friend of mine who also happens to be a first time home buyer and I was asked, "So Dom, how exactly do you get paid in the scheme of things for helping my buy a home. How much is it going to cost me." At that moment a shot of lightning went down my back and I realized that I have taken for granted that buyers know how their agent gets paid. It's just one of those oversights that I have had as an agent because the whole process second nature to me and completely foreign to me. So I decided to write a blog for all of you fine folks out there looking to buy your first home. Here goes...
First, I want to start off by saying good for you! You are doing one of the best things you can do as a First Time Home Buyer, FTHB, by doing research on how the process works. Also, the fact that you are planning on using a Realtor® is really important. Having a good agent that works with FTHB's is going to make the whole process much easier for you. The agent is going to make sure to explain the whole process to you from start to finish and also help you determine what kind of property is going to work for you, whether it's SFR, PUD, Condo etc. and help guide you to a good lender if you're looking at getting a loan. We have the contacts in our phones, desks, planners and even memorized most of the time to get you in touch with well qualified lenders and contractors.
Secondly, here's the answer to how a buyer's agent gets paid. We don't typically get paid by the buyer, in some cases we do but for the sake of conversation we are going to assume that you won't be signing into one of those agreements. For the large majority of sales the Listing agent (agent that is representing the Seller) will discuss a commission with their client that will be offered to the Listing agent for helping the Seller sell their home and to the Buyer's agent for bringing a buyer into the deal and taking care of the Buyer's paperwork etc. Basically, the Seller is paying the Buyer's agent.
Furthermore, the agents don't get paid until the escrow closes and all of the contractors, escrow and title company etc are paid out of the gross payment to the Seller. If the purchase price is $100,000 and the offered commission to the Buyer's Agent and Listing Agent is X% respectively then each agents' commission will be X% of $100,000 and the Seller will net $100,000-2(X%). Through the whole process, you as the buyer are going to be styling because you are getting top rate service from a FTHB Agent that is putting your best interest at the top of their priorities and making sure that you get the best deal possible and protecting you and the SELLER is paying them to do it. Yahtzee!
If you have any further questions feel free to PM me or reach me at any of the available resources below!
More to come on the topic of First Time Home Buyers...
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