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How will I pay my buyer agent, I've barely enough for a down payment?

Reblogger Joe Jackson
Real Estate Agent with Keller Williams Capital Partners Realty 277320

Valid concern! Understanding how to pay your buyer agent is crucial, especially when budgeting for a home purchase. This blog likely provides insights into agent compensation options and how to manage costs effectively. Looking forward to learning more about navigating this aspect of the homebuying process!

Have a super fantastic week!
Joe Jackson, Realtor-KWCP

Original content by Nick Vandekar, 610-203-4543 PA License - AB067198

There are many options to cover the buyer agent's fee, discover some in this post and what you should be looking for in an agent representing you.

There has been a lot of misleading commentary recently about how the real estate buying and selling processes are going to be changing due to several lawsuits, and how this will save consumers money both as sellers and buyers.

Well, let's discuss some facts.

Originally, both the listing broker and selling broker worked for the seller, that is why listing brokers shared commission with the broker bringing the buyer. That agent/broker was a sub-agent for the seller, representing the seller even though they brought the buyer. Then, because of confusion, many of those buyers had thought the agent taking them to the listings was working for them, buyer agency in many states was established.

Buyer agency established a fiduciary relationship between the buyer and the buyer broker/agent. The listing agreement establishes the same between a seller and the listing broker/agent. But this buyer agency agreement did not tackle how the buyer agent would be compensated, it was left as it was with the listing broker offering to share their fee. Although listing agreements for the seller spelled out how much was being charged by the listing broker and the seller could agree how much was offered to the buyer 's broker. All of this was negotiable, which is why every seller asks if they can get a lower commission to sell their homes. There is no standard fee, each brokerage charges what they can to pay the bills and hire good agents. The buyer agency agreement was changed later to include compensation, but most agents were willing to accept what was being offered by the listing broker.

Many different brokers offered different models. Some just offered to put a home in the MLS and gave no advice. Others only represented buyers and took no listings. Some offered flat fees for each stage in a menu type format. There was plenty of choice. In the middle was the MLS which had always been there to make sure agents knew what homes were for sale and to show what compensation was offered to a buyer broker. This used to be hidden, but recently was shown to buyers so they knew ahead of time what their agent was going to be paid.

If you are moving any distance, let alone to a new city, having a buyer agent is essential to understand the nuances of an area from the selling process to differences between townships. Along the Main Line, home prices can vary from street to street. Some areas may have brownfield sites nearby which it is good to know about when raising a family.

The proposed settlement lays out some changes for real estate, it still needs to be accepted by the court and the Department of Justice which has been investigating the process for several years. What the media has laid out is not always true.

So as a buyer there are still ways for you to work with a buyer agent representing you and protecting you even if you can barely afford the down payment.

As an aside, you do not need 20% down to buy a home, there are many options out there with smaller down payments. A good buyer agent can guide you to a mortgage broker who has plenty of options. Also, a buyer's agent may be able to help you find a home with an assumable mortgage at much lower rates than currently offered by lenders today.

Working with a buyers agent, you will need to sit down and negotiate the services that agent is going to provide and the maximum compensation they will charge. This can be renegotiated, if needed.

The listing broker is no longer going to be allowed to show compensation offered in the MLS. But they can do so on their own websites. The seller can decide if they want to offer compensation to the buyer broker.

How will you pay if you can barely afford a down payment, the seller can still offer a concession towards closing costs in the MLS. As a buyer you may use this towards the fees payable to your agent. These closing cost concessions are often limited by lenders depending on the type of loan you are using. Some lenders can also offer a closing cost concession which may result in you paying a higher rate of interest. A good agent can guide you through this.

You can also write an offer that includes a concession if the seller is not offering one, this may require a higher price to cover the concession.

Another option is for you to ask a relative to pay for the agent working with you.

Some media have suggested working with the listing agent, but remember that agent represents the seller, not you, they can give no advice, or limited advice if acting as a dual agent. Besides, you will have to call each listing agent yourself and set up an appointment at their convenience and in a limited inventory market you may miss a home before even seeing it.

Obviously, there will be many ways to tackle this new system once it is established. Working with an experienced agent as your buyers agent will be important as they can guide you through the process and explain the pros and cons of each option so you can make the right decision for you.

What should you be looking for in a strong buyer's agent:

1. Representation and knowledge of the process

2. Guidance and education of the process and the options.

3. Strong Negotiation Skills

4. Does the agent have access to legal advice if required

5. Personalized service, how accessible is the agent

6. Advance knowledge of new listings

7. Strong network of contacts for mortgages, contractors, inspectors, title providers, etc.

If you want to work with a strong agent who can offer these contact Nick Vandekar, Selling the Main Line and Chester County, with Realty ONE Group Advocates, office 484-237-2055, cell or text 610-203-4543, or email  Nick@VandekarTeam.com.

 

Nick Vandekar
Nick is a Tredyffrin Easttown Residential and Commercial REALTOR selling The Main Line, Chester, Delaware and Montgomery Counties.

Giving you the confidence to make
the right decisions.

225 W Uwchlan Ave
Downingtown , PA 19335
Office 484-237-2055
SellingTheMainLine.com
Mobile: (610) 203-4543 [call or text me]
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If you are buying or selling on or around
Tredyffrin Easttown or along the Main Line, 
I can help you, contact me.

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Michael Elliott
Fathom Realty - Burlington Township, NJ
Burlington, New Jersey Residential Sales

You dont!!   You ask the seller to do so.   Case closed.  

Apr 16, 2024 10:30 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joe Jackson it will be interesting to see how FHA, Fannie Mae, Freddie Mac, VA, & USDA handle Seller concessions with the recent change.  Hopefully they will clarify it quickly.

Apr 17, 2024 01:13 PM