We are very often asked this question from home buyers, “How much does it cost to hire you?”
Many buyers agents will answer “Nothing, I’m free” or “The seller pays me”. Although there is a grain of truth in both of those answers, it’s not the whole truth. First of all, real estate buyers agents are not in this business for free. They are not willing to spend time and money working with a buyer for nothing. No person in their right mind would do that. So where’s the catch?
Secondly, why would a seller just pay a buyers agent when that agent is not working for them? Does the buyers agent just send the seller a bill for bringing the buyer and then expect to be paid? Or does every buyers agent negotiate directly with every seller to determine how much they will be paid?
Both of those answers raise more questions than provide real answers.
So let’s go back to the original question. “How much does it cost to hire you?” What they are really asking is how much money do I have to pay in order for you to find the right home for me to buy and to have you help me figure out and negotiate contracts, inspections, financing, closing etc.
Homebuyers are asking how much they have to pay in order to avail of your services. Homebuyers know you’re not doing all this work for free and they hope you’re limiting them on the number of houses they can see because the sellers refuse to pay a buyers agents fee.
So the true answer is:
There is no up front costs to the home buyer for the services of a buyers agent. If the buyer doesn’t buy then the agent doesn’t get paid.
The fee for the services of a buyers agent is already established between the seller and their listing agent.
The expense for working with a buyers agent is not added onto the purchase price of the home but rather it is deducted from the amount of money that the seller receives at closing.
So does the services of a buyers agent cost you anything? In a sense, yes!
Ultimately, whatever amount you finance for the purchase of the home will also include the commissions paid for the services of both the buyer and seller agents.
This is not an upfront cost, it is not added onto the expense of purchase for the buyer but rather it is calculated and considered by the seller in determining the sales price that they are willing to accept.