What Does it Cost to Work with a Real Estate Agent?
For most homebuyers, working with a real estate agent will cost absolutely nothing. You never have to pay to look at houses, and the seller usually pays the agent’s commission. Let’s dive into how real estate agents make their money and how that affects you.
How Do Real Estate Agents Get Paid?
Real estate agents work on commission. That means no one pays anything until the sale is complete. At closing, a commission (generally 3–6%) is split between the real estate agents and brokers involved.
The seller usually pays this commission, in which case you don’t pay your agent at all. However, there are exceptions. In an especially hot housing market, you may offer to pay your share of the closing costs. The negotiation tactic can give you an edge over other buyers with similar offers. Before you do this, ask your lender what closing costs will be so you know you’ll have enough funds. Closing costs include a variety of fees in addition to the commission.
How Many Houses Can you See with a Real Estate Agent for Free?
There is no limit to the number of houses you can see with a real estate agent for free. According to Zillow, the average search time for homebuyers is 4.5 months. But averages are made up of extremes. Some people will find their houses much faster, and others may take over a year.
Don’t feel pressured to settle for a house you don’t like because you think you’ve seen too many houses. Showing you houses is a big part of your agent’s job, and they expect it to take time.
Now, if you’re having trouble finding a house, you may talk with your agent about wise compromises you could make. Perhaps you need to raise your budget, look at other neighborhoods, or be OK with a few DIY projects. But for the most part, be patient with yourself and enjoy the process.
Do You Have to Sign a Contract with a Real Estate Agent?
Remember, real estate agents don’t make money until closing day. Until then, they’re showing you houses, writing offer contracts, and more without pay. Because of this, some agents will ask you to sign a buyer’s agent agreement.
This agreement usually lasts for about six months. During that time, you agree not to buy a house with any other real estate agent. Some will have you sign this before they show you any houses. Others will have you sign it when you put in your first offer on a house.
If you have a bad experience, you can ask the agent to terminate your agreement. Many will do this rather than work with a disgruntled client. You’re also free to switch agents when the agreement runs out of time. Otherwise, this agreement minimizes risk for your agent, which is a good thing. They can freely invest their time in your house search because they know they’re very likely to make a commission in the end.
Still Have Questions About Real Estate Agents?
There’s a lot to learn in the homebuying process. That’s why we created our Homebuyer Education course! This online course teaches you what to expect when you’re buying your first home. You’ll learn the homebuying process, how to prepare for homeowner expenses, and post-purchase tips.
The course is online, so you can take it at any time, at your own pace. Are you ready to get started?