Finding the right house, let alone buying the house once you find it takes quite a bit of work and expertise to make sure that you get the best deal for you. This is where hiring a real estate to represent you in buying a house makes a lot of sense.
Many home shoppers do not realize that when they hire a real estate agent to help find a house to purchase that the real estate agent commission is paid by the seller of the home if the house they buy is listed with a real estate agent. With this in mind, a home buyer would be well advised to find a real estate agent that they like and hire them through the home buying process because in most cases the real estate agents commission is paid by the home seller.
Real Estate Agent Commission - Paid By The Home Seller
It is a common misunderstanding that as a home buyer, you have to pay the real estate agent commission when they find you a house to buy. This is simply not true. The real estate agent that you work with to buy a house, gets paid their realty commission through the agreement that the home seller has with their listing agent. The home seller agrees to pay a certain percentage of the sales price to the real estate agents involved in the home sale transaction.
Typically, home sellers agree to pay realtor fees anywhere from 4%-7% of the sales price to the real estate agents involved in the sale transaction. In many instances this money is split between the listing agent and the buyers agent. Usually in the listing agreement it is spelled out how a buyers agent will get paid if they bring a buyer to the listing agent and a sales contract is approved.
For Sale By Owner Sales Tranactions and the Real Estate Agent Fees
In the case where a home buyer has signed a buyers agent contract with a buyers agent (real estate agent who agrees to represent a home buyer in looking for a house) and finds a for sale by owner home where this is no listing agreement things could get sticky between the home buyer and the buyers agent.
The home buyer and the buyers agent must work out ahead of time what happens if the home buyer finds a for sale by owner home and makes a sales offer (which gets accepted) without the use of the buyers agent. The home seller has no obligation to pay the buyers agent in this case, but the home buyer has a buyers agent contract which technically obligates the home buyer to pay the buyers agent a real estate agent commission if a house is found during the time period that the buyers agent contract is in effect.
If there is no prior agreement between the home buyer and buyers agent, the home buyer could find themselves having to pay the buyers agent some realty commission fee for the work that the buyers agent has put in searching for other homes.
There is no absolute way that this situation will pan out every time. It is best advised that you have a clear agreement with your buyers agent about what happens if you find a home that is not obligated to pay real estate commissions.
Additional information about working with a buyers agent.
