Do you have doubts about how much it costs to work with a real estate agent? Learn what influences its cost
Selling or buying a property is a roller coaster of emotions. On either side you will need time, patience and good planning. In this challenging process, a little help from the outside doesn’t go amiss. Especially if it is accompanied by expert knowledge that allows you to enjoy this ride without getting too dizzy. This is why many sellers and buyers choose to hire a real estate agent.
But how much does it cost to work with a real estate agent? If you are wondering how much you will have to reserve for this management, you have come to the right place. In the following article we explain how a real estate agent’s fee works so that you can balance your budget and enjoy the advantages of having the guidance of this professional.
Factors influencing the cost of an agent
Before we talk numbers and you start doing the math, it is important for you to know that there is no universal agreement or regulation that determines how much a real estate agent charges for providing their services. Most of the time the monetary compensation received is in the form of a commission. The amount of this commission will depend on different factors, such as:
Whether you are the seller or the buyer of the property
Whether the agent is independent or works under a real estate agency
The time it takes to sell or buy
The total value of the property
Although the cost will depend on the factors mentioned above, there is a price range you can go by when hiring a broker. Doing so is more cost-effective than is commonly believed. Likewise, since it is not established exactly how much it costs to work with a real estate agent, there is an opportunity to negotiate payment.
How much does a real estate agent charge if I am the seller?
When you are selling a property and you engage the services of an agent, you can expect to pay a commission of between 4% to 6% of the total sale price. On some occasions, although less common, the agent will charge you a fixed fee for their services.
How much does a real estate agent charge if I am the buyer?
If you are the buyer, you may encounter two cases:
The agent does not charge you for his services and when the purchase is successfully closed he will split the commission with the seller’s agent. For example, if the seller’s agent stated that he would charge a 6% commission at the end of the transaction, both will receive 3%. Of course, this is in the event that they have agreed between them on a 50/50 split.
In short, when you are the buyer the cost of the contract will be agreed between the agents involved in the transaction. And yes, it’s exactly what you’re thinking! In this case it is safe to say that it will not cost you anything to work with an agent.
The second case you may experience as a buyer of a property is that the agent asks you to sign a document known as the “Buyer’s agreement”. This agreement in the form of a contract states that you will pay the agent a fixed fee or percentage of the transaction for their services.
Although in this case the payment to the agent will come out of your pocket, working through a “Buyer’s Agreement” can provide you with the following benefits:
You will have an agent working exclusively for you.
You will be clear on what services the agent will be performing and how long the services will last.
You will have more freedom to demand certain communication and additional services
Why do some agents choose to work under a “Buyer’s agreement” instead of receiving commission?
This agreement allows the agent to protect their invested effort, time and resources in the event that the transaction does not close satisfactorily. Remember that the other way he receives monetary compensation is through a commission. That is, without the closing of the sale or purchase of the property, your agent would remain unpaid, despite having provided his services. It’s not fair, is it?
Therefore, although this practice is not common, especially in Puerto Rico, this is the reason why a small number of real estate agents prefer to charge a fee for their services.
Tips and details to keep in mind when hiring an agent
Regardless of the type of agreement you reach with your agent, make sure that all parties involved understand and agree to it.
If you are the buyer, have agreed to pay the agent a fixed fee for his services and are willing to negotiate the payment, take into consideration the benefit of both parties.
Keep in mind that if the agent works under a real estate company he/she will also have to share his/her profit with the company.
If you have agreed with your agent on a commission payment, keep in mind that the higher the value of the property, the more likely you are to negotiate a lower commission rate.
If you are the buyer and you are working under a “Buyer’s agreement” make sure that all the services to be performed by the agent and other conditions you want to establish are stipulated in the contract.
Be clear about what you want when selling or buying a property and communicate it to your agent. This will help reduce the time it takes to close a transaction and save money if it is a factor in your agent’s cost.
If you are the seller, be very careful with those brokers who offer to sell your property for a very low commission. Even if your eyes start to glaze over because you find it convenient and even favorable, the reality is that you expose yourself to the following:
That your broker refuses to share the commission with your buyer’s agent because his profit is already very low. This would cause you to lose interested buyers with good offers.
The seller delays the purchase because he is waiting for an unrepresented buyer so that he does not have to split his commission.
That you don’t receive the best service and the process ends up being a frustrating one or even without results.
How to find the right agent for you?
Now that you know how much it costs to work with a real estate agent, how do you find the right one for you? This is another process that takes time and can cause you stress. That’s why Findit is ready to help you in your search and connect you with the right agent according to your needs!