Comments on: Go House Hunting With A Buyer’s Agent http://www.bankaholic.com/finance/go-house-hunting-with-a-buyers-agent/ Blogging about personal finance, foreclosures, mortgages, interest rates, and budgeting. Wed, 17 Mar 2010 14:08:17 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Wes http://www.bankaholic.com/finance/go-house-hunting-with-a-buyers-agent/comment-page-1/#comment-27605 Wes Sat, 31 Oct 2009 15:02:55 +0000 http://www.bankaholic.com/finance/?p=1328#comment-27605 Be careful to know the rates that typical (seller's) agents will charge before you sign on with a buyer's agent. When I was looking for a home a couple of years ago I could only find one reputable buyer's agency for the area I wanted. The agency wanted a 2.5% fee. In my area the typical seller's fee was a 2%/2% split - 2% for the buyer's agent and 2% for the seller's. This would have meant that I was on the hook to the buyer's agency for an extra .5% of the home price for most of the houses I would have been looking at. Also, had I signed with them and bought a house in the area without involving one of their agents (basically, a for sale by owner) even if they hadn't helped at all I would have been on the hook for their fee for something like 3 months after signing. They guaranteed 3% off the home price, meaning that if I bought a house at the seller's asking price (and a 2.5% margin below that, assuming 2% was paid by the seller) I would not have owed the buyer's agent a fee. Anything beyond that would have theoretically justified their fee. I decided not to sign with them. This decision was based solely on the fact that I believed they had lied to me about seller's fees in the area. They told me that the split was typically 2.5%/2.5% and that their fee was generally covered in the seller's agreement. I suspected this not to be true because I had been asking seller's agents at open houses I had been checking out (mostly out of curiosity) to find out before I walked into the buyer's agency. I ended up with a house I liked in my price range in a neighborhood the buyer's agency said I wouldn't be able to afford for 3% less than asking. Maybe they could have done better - who knows. I do know that the real estate agent/agency that helped me find and buy the house I bought got 2%. Be careful to know the rates that typical (seller’s) agents will charge before you sign on with a buyer’s agent. When I was looking for a home a couple of years ago I could only find one reputable buyer’s agency for the area I wanted. The agency wanted a 2.5% fee. In my area the typical seller’s fee was a 2%/2% split – 2% for the buyer’s agent and 2% for the seller’s. This would have meant that I was on the hook to the buyer’s agency for an extra .5% of the home price for most of the houses I would have been looking at. Also, had I signed with them and bought a house in the area without involving one of their agents (basically, a for sale by owner) even if they hadn’t helped at all I would have been on the hook for their fee for something like 3 months after signing.

They guaranteed 3% off the home price, meaning that if I bought a house at the seller’s asking price (and a 2.5% margin below that, assuming 2% was paid by the seller) I would not have owed the buyer’s agent a fee. Anything beyond that would have theoretically justified their fee.

I decided not to sign with them. This decision was based solely on the fact that I believed they had lied to me about seller’s fees in the area. They told me that the split was typically 2.5%/2.5% and that their fee was generally covered in the seller’s agreement. I suspected this not to be true because I had been asking seller’s agents at open houses I had been checking out (mostly out of curiosity) to find out before I walked into the buyer’s agency. I ended up with a house I liked in my price range in a neighborhood the buyer’s agency said I wouldn’t be able to afford for 3% less than asking. Maybe they could have done better – who knows. I do know that the real estate agent/agency that helped me find and buy the house I bought got 2%.

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