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I’m a first time home buyer, so I didn’t exactly know what to expect. I noticed the Clising Detail from my lender which reads that seller will pay BOTH commissions ($18,000 x 2)- highway robbery!!!! I only looked for 1 day to find the home and he has been handling the rest since- but REALLY???!!! So overcharged , but doesn’t look like I’m stuck paying it. Is this normal??
Seller pays both commissions (one of the reasons you lose money if you sell a home soon after purchasing). A FSBO seller doesn’t want to pay ANY commission.
seller pays both commissions (one of the reasons you lose money if you sell a home soon after purchasing). A fsbo seller doesn’t want to pay any commission.
In 99% or more of the home sales that involve a real estate agent that represents you, the Seller pays the commission. Usually to their listing agent, whose brokerage has agreed to share what the seller agreed to with all other companies and agents in the area.
About 9 out of 10 home sales work this way.
In about 3% of the home sales total, an individual sells their home to a stranger and no agent/Realtor is involved, thus there is no compensation paid.
I’m a first time home buyer, so I didn’t exactly know what to expect. I noticed the Clising Detail from my lender which reads that seller will pay BOTH commissions ($18,000 x 2)- highway robbery!!!! I only looked for 1 day to find the home and he has been handling the rest since- but REALLY???!!! So overcharged , but doesn’t look like I’m stuck paying it. Is this normal??
The closing agent, attorney or title company, "pays" the commissions.
They write the checks.
Seller pays both commissions (one of the reasons you lose money if you sell a home soon after purchasing). A FSBO seller doesn’t want to pay ANY commission.
Well, a lot of FSBO sellers will pay a commission to a buyer's agent.
OP - Yes, typically the way it works is that the seller has agreed to pay a commission to the seller's agent which compensates that agent. The seller's agent will usually then agree to split part of that commission with a buyer's agent.
Where I am a 6% commission is typical. So if you were selling a $300,000 house then you would agree to pay your agent $18,000. However, typically, your agent would collect $9,000 and the buyer's agent would collect $9,000. If, however, your agent represented both the buyer and you (or if the buyer had no agent) then your agent would collect the entire $18,000. (This omits any discussion of how your agent may then split that commission with the agent's broker).
When you bought your house, did you have a buyer's agent? How was that agent compensated? Most likely through sharing in the commission that the seller agreed to pay their agent.
I’m a first time home buyer, so I didn’t exactly know what to expect. I noticed the Clising Detail from my lender which reads that seller will pay BOTH commissions ($18,000 x 2)- highway robbery!!!! I only looked for 1 day to find the home and he has been handling the rest since- but REALLY???!!! So overcharged , but doesn’t look like I’m stuck paying it. Is this normal??
You're very wise as a consumer to notice this and to care about it. Unfortunately many or most buyers are led to believe that the services of a buyer's agent are free for them. So they don't bother to care how much it is actually costing them in the end or to ensure that they are getting good value for that cost.
If you were having to directly write a check for the services provided to you by your buyer's agent, how much would you be willing to spend for those services? You mentioned that his cost is 18,000. Would you be willing to write a check to him for 18k for what he's doing for you? 10k? 7k? 5k? 2k?
People are generally ok to pay for things that provide them good value so what you are willing to directly pay is a good reflection of your perceived value. If there is a gap in cost vs perceived value, then there is a problem. And if you're mortgaging the house, that 18k cost could end up costing you 31k with a 30 year mortgage. Think about $85 every month for 30 YEARS! And that's just the buyer's agent cost, never mind the sellers agent!
I think that all buyers should check the cost of their buyer's agent (as you have) and ensure that they are happy for this to be added to the overall cost of the transaction and to ensure that they are getting the value from it reflected in that cost. The days of buyers looking the other way because they think someone else is paying need to end.
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