If you are a first-time home buyer and in the market to purchase a home as soon as possible, then you may try to go through the buying process alone to save yourself some money. However, this may be a mistake and might actually cost you more in the long run. If you are worried about your finances and costs associated with a new home purchase, then keep reading to understand why a real estate agent makes sense financially.
The Agent Will Not Cost You Any Money
If you hire a professional for a service, then you are likely well aware that you will need to pay for the services provided to you. However, this is not the case when it comes to hiring a real estate agent as a buyer. In fact, it will cost you nothing to hire the professional. While a real estate agent will work for you, it will be the responsibility of the sellers to pay the buying agent's commission. In most cases, the seller's real estate agent will need to split their commission with the buyer's agent. Commissions are often split 50/50.
The selling agent will create a contract with the home seller that indicates that their commission will be a certain percentage of the home sale. In most cases, the commission will be between 4% and 6%. This depends on the price of the home. Homes less than $1 million will probably have a commission between 5% and 6%, and homes over $1 million will have lower commissions.
For example, if you choose to buy a house for $120,000, and the real estate commission is 6%, then the seller's agent will receive about $7,200. Your real estate agent will likely receive about $3,200 of the commission. This means that your agent will be highly motivated to find you a home that you like, even though you are not directly paying them.
Agents Can Negotiate Costs
There are a wide variety of costs associated with buying a home, and these costs can quickly raise the price of a home. If you have a concrete budget to work with, then your real estate agent can negotiate these costs and make sure they are paid by the seller. These costs will need to be placed in writing in the sale contract so it is clear who needs to pay the fees. Your agent will know to add the costs to the contract so you are not on the hook later for costs that you did not know about in the first place.
For example, you will likely need to schedule a home inspection, a survey, and deed transfer. Escrow fees, home appraisals, home transfer taxes, and other fees will need to be paid. These costs can add up to about 2% to 4% of the price of the home. The closing costs can all be negotiated by your real estate agent to help keep you on track financially. If you do not need the appliances and agree to allow the seller to take them when the home sells, then the approximate cost of the appliances can even be deducted in the contract. This is another thing that your real estate agent will look at.