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Thursday, 05 January 2006 |
Many people think that you can save a lot of money if you buy a home without using a Realtor. The truth is that you cannot really save any money by denying yourself the services of a Realtor.
Some people still think that they will have to pay a Realtor to represent them when they buy a home. This misconception is more common than you might think. I have had to explain this to a lot of people. When you hire a Realtor (a buyer's agent) to help you find a home he or she is paid out of the proceeds of the sale by the seller. I know what you're thinking. "That sounds like a conflict of interest", but it isn't. The buyer's agent in each transaction is required by law to represent the best interest of the buyer in the transaction with the penalty for failure to do so being loss of license and steep fines.
There are two kinds or classifications of Realtors. Selling or Listing Agents have an agreement with a homeowner to market a home let's say in this case for 6% of the proceeds of the sale. As part of the marketing plan a Listing agent will enter the home into a huge database of homes for sale and offer a portion of his commission to any agent who can bring a buyer to the table. This portion, usually ? of the total commission paid or in this case 3% is called the Buyer's Agent Commission. I have heard people say: "If I don't hire a realtor I can save the 3% buyer's agent commission. What they don't know is that if there isn't another realtor involved the listing agent gets to keep the whole commission. In real estate terms this is called "double-siding the transaction". Double siding is great for realtors but it is not good for either the buyer or the seller because of the limited scope of what the Realtor can say and the advice the agent can dispense since he or she has to represent the best interest of both parties. In any case there is not any money to be saved by doing it this way. |
