I have become increasingly aware that few people, outside the real estate industry, know much about how REALTORS are paid.
Unfortunately, there seems to be a couple of prevailing themes in viewing REALTORS from the public eye.
- They’re either way over paid and not needed or
- They are just a necessary part of selling and there isn’t anything you can do about.
Regardless of which side of that fence you sit on, knowledge is key. This will hopefully help you decide what actions to take when it is time for you to sell In previous blogs, we’ve discussed how Real Estate commissions work and who actually makes what.
In this blog, you will read about, why I feel that the buyers agents should be paid around 3% of the sales price for their service.
The job of a buyers agent is in-fact, a pretty tough one. First, the agent has to figure out how to find people looking to purchase homes. Some of the methods regularly used in acquiring buyers are quite expensive, are usually a lot of work and only end up with a closed sale a small percent of the time.
Secondly, once a buyers agent does find a person who is wanting to buy a home, they have to make sure that person is not only willing to buy a home but that they are also able to afford to purchase the property. For example, sometimes people want a new home but they need to work on their credit worthiness in order to move forward. The buyers agent will help their client through this process, which can take several months even a year.
Finally, if the buyer meets the first two points, then the buyers agent may have struck gold they have found a buyer who is not only willing to buy a house but also qualified and able to do so.
But, Not so fast, they are still a long way away from ever seeing any financial fruits from their labor.
The buyers agent at this point is working to find just the right home for the buyer all the while the buyer is being bombarded by other agents wanting to help them find a home, now that they are qualified!
The buyers agent keeps chugging along working for their client. They are spending evenings and weekends view homes that meet the criteria the buyer says they want, but the buyer is just not finding THE one they want to place on offer on there is always a reason that is it just not perfect.
Meanwhile, the client, depending on their circumstances, may have to re-sign their lease and the buyers agent will have to wait another 6 months to a year in order to help that buyer purchase their home. Or any number of other elements that the buyers agent has little if any control over, such as, a new job in a different city, a health condition, a family issue, all of which result in no closing an no money for the buyers agent.
This time though, after months or maybe even years of working with their client, the buyers agent may have stumbled upon your perfect home the buyers agent has brought you a buyer who is willing to purchase your home and is qualified to do so.
Yet, they still have another month, maybe more, to help the buyer through the rest of the process so, even now the job is not done!
Do you really think they should not be paid for all of their hard work.
Securing clients who are willing and able buyers is a lot of work, rough with pitfalls along the way, that could and do oftentimes negate all of their work and end in no closing and no money.
Now, the buyers agent has helped the buyer to the home they want to place an offer on.
Then the next round of work begins:
- They place the offer.
- Go through several days of nail biting negotiation, do they have a deal? Who knows! Sometimes, sometimes not and if so, that means, it is time to start all over again!
Let’s say for the sake of shortening this blog that, yes, they have a deal.
Now the buyers agent has to make sure the buyer gets:
- A quality home inspection, they walk them through that whole process, advising them all along the way. Hopefully, there are not many repairs that need to be done to the home, and they are able to negotiate an agreement regarding that.
Then, it’s time to hurry up and wait from the buyers agent perspective, they have now done everything they can do if this a cash deal they are home free.
If not, they now wait on the buyer to work through the lending process with their lender. Hoping that both the buyer and the property ultimately qualify for the financing sought and that there are no obstacles in the home stretch that can’t be overcome. They work patiently with all parties involved and work to revolve any and all issues, trying to make it as pleasant and trouble free as possible.
So now do you think they should be paid their 3%. I think it’s a paycheck well earned.
I believe they have earned their 3%.