OK, now that I have your attention…
We have come across so many individuals in our travels that aren’t clear how real estate agents get paid. I suppose that we in the business have known it for so long, that we assume everybody else does too. I’m sure that my mechanic assumes that everyone knows where the pistons and crankshafts are located under the hood (psst – buddy, WE DON’T!). So it is obviously wrong of us to assume that everyone knows how agents get paid.
Lets tell it in a story. Sam Seller is relocating to Los Angeles to become a movie star, and needs to sell his home. Sam signs a listing agreement with his favorite Realtor, Alice Agent, to sell his home. In this agreement, it says that if Alice brings a ready,willing, and able buyer (someone that WANTS the house, and has the means to purchase it) to purchase his home, and that deal closes, Sam will pay Alice a commission for her work.
Now, Alice can work hard find a buyer herself, whether by mailings, yard signs, newspaper ads, etc. If a buyer comes directly to her to purchase the home, then she keeps that commission herself. In our story, that doesn’t happen. Pete the prospective buyer has his own agent, Bob Broker. Bob has been showing Pete houses, and Bob sees Alice’s listing pop up on the MLS. Bob takes Pete to see this lovely home, they write an offer, and Sam agrees to the purchase price. Everything goes well, the home closes, and Bob the Broker, Petes agent, SPLITS the commission that Sam is paying Alice with Bob. So Pete has not paid Bob a penny for his services. Essentially, Sam is paying Bob for bringing a buyer to purchase his home, so he can jump on a plane and start his new glamorous career, and everyone lives happily ever after.
So, back to our headline. Free Realtor. If you are a buyer, or a potential buyer, the services of a buyers agent are completely free to you. Now, if you are completely free to pay that buyers agent if you so choose. For example, if you are dead set on buying a home at the Sheriff’s auction, you can pay your agent to advise you, and hold your hand through the process. But, that doesn’t happen too often.
Even if you go out and look at 50 houses, and decide you are going to wait until next year to buy, all the time that Realtor spent finding homes for you to see was free to you. Now, we always advise to get a good grasp on exactly what you want, what you qualify for, and (most importantly) what you can afford, BEFORE you start looking, so you don’t waste your time or your agents time.
Feel free to contact us with any questions on this subject.
