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I currently have a realtor working with me and not the seller's realtor. Guess since I've already found my place, I'm using the realtor to help me with the paperwork and 'negotiate' with the seller. I apologize if these subsequent questions are elementary, but I'm still confused in terms of how they get paid - I know they are commission-based, but am I the one that pays it or is it the seller after the home sale is done? And if I'm the one that pays, how do I know what the commission rate is of the person - do I just ask up front?
Also in TN, would you recommend having a real estate lawyer/attorney read over the contracts and be present at closing? I've heard both extremes and for some states, it's mandatory. I know people that bought homes without realtors and/or lawyers and most common were those that just had realtors.
Finally, who all is involved at closing and is it standard across all states? I know there's an independent third party that the lender gives the big check to, but is that standard for them to be present at closing?
Commissions are usually 6% and are paid by the seller. Normally half goes to the sellers agent and half goes to the buyers agent. You agent is working on your behalf but paid by the seller so it's a little weird. You don't have to do anything in terms of paying anyone. It is all handled for you.
Commission rates CAN be negotiated but 6% is the standard. So if the house you buy is $300,000 the two agents will split $18,000 or $9,000 each. If the agents work for a big company like Bob Parks, then a certain percentage of their commission will go to the big company.
We had our lawyer read over the contract for us. He did NOT attend the closing. When we sold our house in CT we did go to the closing. When we BOUGHT our house in TN we did not attend the closing as we couldn't get here in time (2 day drive).
It's not particularly interesting - you hand over keys and sign some papers and that's about it. I guess you could crack open a bottle of champagne? But we didn't. We were exhausted!
Glad you have made your decision! When will it be done? Have you picked out cabinets and countertops and all that???
So, if the seller is paying for everything, then why would a realtor be "fighting for me" or "working on my behalf?" I'd think they want to increase the asking price with additional upgrades to add to the commission that they'd be getting. I'm confused.
I'm on the fence on whether or not I need to have a lawyer read over the contract. If I were to hire a lawyer in this home buying process, would they only be needed for reviewing the final closing contract before signature? I've heard that nowadays the contracts are pretty standard unless you're purchasing something that's way out there and extremely rare/unique. I don't know though - I think an investment of a few hundred bucks in the review of a contract may go a long way than having to pay dearly down the road for hidden fees. Does an independent party (escrow agent) show up during closing?
This Fri, I'm going with my realtor to give the initial earnest deposit money since I was pre-approved today so I guess we can pick out everything assuming it hasn't been ordered/installed yet. The home right now is just the wooden frame with a roof.
> So, if the seller is paying for everything, then why would a realtor be "fighting for me" or "working on my behalf?" I'd think they want to increase the asking price with additional upgrades to add to the commission that they'd be getting.
To some degree you are correct. However the buyer's agent gets nothing if you don't buy a house, because you can't get a mortgage or because you decide the price is too high. "Upgrades" are usually only an issue when buying from a builder.
> I'm on the fence on whether or not I need to have a lawyer read over the contract
If you are not familiar with the process, you want a lawyer to review your offer to make sure it has appropriate contingencies for inspection, mortgage approval, time line, etc. etc.
Contracts are almost always the standard boiler plate contracts provided by the TN realtors association, unless you're buying in a developers subdivision and they often use their own contract. The standard contract is a fill in the blank affair, but you still need to understand what it says.
My preference is always to have an atty. do the closing. There are title companies that do these, but my preference is to use an attorney that you trust to conduct, at least, your half of the closing. It's likely you're paying or splitting the fees associated with the actual closing so you can choose who does it. When you're paying you can choose.
I Just noticed you're buying a builder's home. They may indeed be paying for all closing fees so they would get to say who does the closing, and may require you to use their title company. You may still at your expense include in the contract who you want to do your half of the closing.
I would suggest you go to the closing so the atty. can explain to your satisfaction what's going on. You would want to make sure the contract is to your liking way before this point though.
Are you buying a partially built new home from a builder?
If so, you are not going to a closing. A closing is when you take title and possession as in you move in. I believe you are going to meet and place a "builder order" for the house.
In my last two new homes I signed a builder lot order/reservation contract that was valid for 30 days and I gave them $1,000.00 down. During this 30 days we worked out the options, final pricing, etc. I also got a copy of the association Covenants and Bylaws to review. I could back out and get a refund at anytime during the 30 days. At the end of the 30 days, I signed a builders purchase contract. The house was promised in 90 days. As I was paying cash there were no get financing time/conditions, etc.
Typically when buying new construction in a development, the developer will pay a finders fee to any buyer's agent that brings a buyer to the table even when the developer has their own sales people. I am pretty sure that early on your buyer's agent knew up front what they were going to make on the deal (a few% from the builder).
That said, I would not trust the buyers agent. I would want it verified that I will not be paying them anything or if I have to, that I know it and I am willing to do such.
I think you might want to lawyer up to be sure as to what and to whom you will be paying. Also have the lawyer review anything before you sign it.
Hope this helps.
Last edited by accufitgolf; 08-30-2012 at 08:21 AM..
I'm thinking of getting an attorney to look over the contracts before my final signature at closing, since this is my first time.
I will be putting money down on a home that is currently being built as we speak - just this past weekend the building was just wooden studs with a roof. I stopped by today just to take a look and the siding was being put on.
As far as my realtor (buyer's agent), I was assigned one through USAA which is my bank. I found the property on my own, but just need someone to walk me through all the documentation and the process that will be taking place very soon. So, I assume this agent is working for me and not the builder/seller. Tomorrow I will be putting down my earnest money to show I'm serious about purchasing the home.
For payment to a certain "party", I know I'll be paying for home inspections and possibly a real estate lawyer to read over the closing contract before I sign. Since I personally won't be paying my realtor per say, is there anyone else I would be paying too during closing?
There will eventually be a HUD statement or so I assume on a new house (I have never bought one). It has 2 columns for the sellers' costs and the buyers' costs so you can see exactly what and for what you are paying.
I have never used an atty as they are not used in the states where I have bought: LA, MS, UT, TX. We closed at the title company. I have no idea how TN does it. My states have standard contracts so no atty review is required.
A buyer's agent normally does not get paid for upgrades only the base house price. They can advise you on what are the desirable upgrades for your lication and price point. You want to have a popular package in case you need to sell. Maybe you get transferred? They can help you resist any hard sell at the design center. If anything gets delayed or goes wrong they run interference for you.
And lastly you want an independent house inspector to inspect several times during the building process.
You should probably ask your realtor many of these questions. They are bound by their code of ethics and their agency relationship to insure your interests, and your interests alone, are first and foremost. They should have experience on how all this works and what will work best for you.
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