You’ve probably seen the advertisements that tell you all about how you should hire a buyers agent because it comes at no cost to you. How does that actually work? No one actually works for free…
How it works is that when a seller hires an agent to sell their home for them, they offer the agent a certain amount of commission to get the house sold. That agent is going to decide how much of their commission they are going to share with a buyers agent that brings a buyer. We do have something in the state of Utah called limited agency where the listing agent can work for both the buyer and seller, but I have found that it isn’t in the best interest of the clients because it is really hard to be neutral when you represent and negotiate for both parties. You really do want your own realtor.
A listing agent will put the home on the market and they will put out what is called a buyers agent commission. Nothing is set in stone, but that is what agents are offering to bring buyers out to the property. As a buyers agent, how I find buyers is that I go through the process, educate them, go over pros and cons, come up with their dream list, get them qualified with a lender and then we finally start house shopping. The time that takes is anywhere from a couple weeks to a couple months evens a year + at times. It can be a lengthy process. to have both the buyer and seller at the same time is pretty hard. That is why a listing agent will offer a buyers agent commission. As a listing agent myself, I would rather have the buyer be represented by someone else, so that there aren’t any questions about where my loyalty lies and I am only working for one party in the transaction.
Some people may think that it’s not very fair because the buyers agent is going to be persuaded because they are paid off commission, so they will try to get you a more expensive house so they can make more money.
For numbers sake, lets say you’re buying a 300K home and it is a 3% commission, your buyers agent would make 9K on your purchase. Now, if you were to buy a 330K house which is quite more than 300K, the difference is only 900$ for the buyers agent. If your buyers agent is broke enough that 900$ is going to sway them in making decisions, they probably aren’t the best agent for you. Make sure to hire someone that isn’t going to make or brake from a transaction like this.
I’ve had plenty of times where my clients have picked a less expensive option after going through all the possibilities with them. I try to help my clients see what their monthly payments will be, instead of looking at the most they can qualify for. I do this, because I want them to see what they can find that will bring them their dream house, but not have them feeling swamped in payments.
I hope that this helped give more light and understanding on how buyers agents seem free, but in reality they are still being paid. If you are looking to buy or sell please reach out to me I would love to help you.