The price of buyer agents and a can of beans

Industry Observer

When folks want to fire their landlord, there are a few early thoughts that usually come to mind.  First is the joy of just thinking about getting rid of Mr. Landlord and his draconian restrictions on their lives.  Next comes the realization that buying a first home is an unbelievably huge financial commitment. Then follows the decision to go for the lifestyle upgrade.

After a few trips through cyberspace surfing the local market, it's time to get down to the business of making the dream a reality.  Where does one go for guidance in taking that first step?  The best way to start is to find a reputable buyer agent who will agree to work exclusively on your behalf.  We'll save suggestions for finding that buyer representative for another time, but let's first consider money matters and what it costs for buyer representation. 

Although the service is different, the cost of having exclusive buyer representation is structured similar to the cost of having someone sell you beans.  Although there is little if any buyer representation involved with the sale of a can of beans, the pricing is similar.  Walk into the local Piggly Wiggly and pick up a can of beans, walk to the cashier and hand over a dollar or whatever the price.  The cost of production, distribution, advertising, etc. is included in that dollar, so some would say they paid nothing for the service.  The fact that you did not read the newspaper ad before going to the store and buying the beans does not change the price you paid.  No, you didn't actually use the advertising, and yes, you're still going to pay for it.

Now, you're going to buy a house, and maybe you choose to not become a client of a buyer representative.  By the way, even the worst, most inexperienced buyer agent will not increase the advertised price of the home to you, and the best will save you a bundle.  Anyway, you will pay the price of the house and usually nothing to the buyer representative because, like the can of beans, the representative's compensation is included in the price you pay.  Actually, the seller pays a marketing and sale commission to the listing broker, and a portion of that fee is distributed to the buyer representative's broker.  The representative then receives compensation directly from his or her broker.  Like the can of beans, the representation cost is usually included in the price of the home.

To get all the home buying details, call me to arrange a free home buyer strategy session.  It takes an hour or so, and I promise you won't regret the experience.

Posted by

 Mike Carlier  Lakeville, MN





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William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

Mike, great blog!   YOu hit the points that people really need to consider. We are the experts so why take the chance going it alone.

May 11, 2012 03:23 AM #1
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I like this post.  As you so simply point out, the representation fee is included in the price of the home.

May 11, 2012 11:18 AM #2
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Mike Carlier

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