A common question, particularly for first time home buyers, is, “How much will I have to pay a real estate agent when I buy a home?” In short, these costs are typically taken on by the seller and you don’t have to worry about them. Digging in, we will explain some of the different circumstances that may change that situation.
How much are Realtor Fees?
Realtor fees typically range from 5-6% of the sale price of the home. If a home is listed for $250,000, realtor fees at closing typically range from $12,500-$15,000. The fees are split between the seller’s agent and the buyer’s agent. The fees can be split evenly between the two parties or the percentage to each agent can vary depending on the situation. Realtor fees are sometimes negotiable, although not every realtor will negotiate their fees.
How are they factored in?
Although the seller typically pays these fees as part of the closing, the home price may be higher to account for these fees. This practice is common as the fees are coming out of the profit on the home. Some might argue that means that the buyer pays the realtor fees indirectly. Whatever way you look at the situation, it is a cost of doing business that has to be factored in somewhere.
Dual agency is a term used when a buyer and seller are represented by the same real estate agent. In some cases, this can save the parties money because the real estate agent will lower their commissions since they are the sole agent on the property. For this reason, some buyers and sellers think that this is advantageous to them. It might be, but keep in mind that an agent on both sides of the transaction might have a harder time keeping the best interest of both parties in mind. In some states, dual agency is illegal to avoid any conflict of interest in a transaction.
Other Realtor Fees
In some cases, realtors may charge a “finders fee” to homebuyers. This would be something that would be added onto your closing costs. If it is included, it is often much lower than the percentages listed earlier. It can be a flat fee and is applied only when a buyer finds a home and gets an accepted offer. An example of a fee like this would be $250 added onto closing costs. This is not something that all real estate agents require, but it is a question that you should ask when meeting with a real estate agent who may represent you.
The common question is definitely a good one to understand if looking to buy a home. Overall, it is not something that buyers typically have to worry about. It is often taken care of on the seller’s end and is one less item that homebuyers need to think about!
Keep asking good questions about the process. Sly Real Estate is a fan of questions and loves to support homebuyers in any stage of life, whether purchasing a first home or purchasing a tenth! Using a real estate agent still provides significant benefit to a buyer in the search and closing process. Reach out to us today to discuss any questions or your current search!