It's very simple. The closing attorney almost
always pays both the seller's and buyer's agents' commissions
from the proceeds of the sale. The commissions are still
paid the same way, so the fee is a part of the purchase
price and therefore factored into your loan.
Traditionally, real estate commissions have
been included in the sale price of the property. This practice
has been justified on the basis that the real estate agents
provide a valuable service, which is a normal cost of the
transaction. The seller brings equity to the table and the
buyer brings money. Thus both contribute to the payment
of the real estate commissions. Lending institutions include
these commissions in the maximum limit of the loan.
By hiring a buyer's agent, you will most
likely SAVE money, because I will be fighting to get the
home you want at the lowest possible price!
You're probably wondering, "If you're
getting paid a percentage of the sale price, then would
you really be fighting to get a lower price for me? Wouldn't
it be better for you to sell me on a higher price?"
The answer is quite simple. In most buyer
agency contracts, the commission is described as a flat
fee (based upon your general price range) OR a percentage
of the sale price, whichever is higher. This way, I can
still feed my family and you can be assured that I will
in fact be trying to get the lowest price for you. By doing
this - you will still be paying less. Here's an example:
If
you're looking for a home in the range of $300,000, your
buyer agency contract might have the fee written like
this: "a flat fee of $9,000. or 3% of the purchase
price". If we find a home that the seller wants $300,000
for, and I can get the price down to say $285,000, then
you've just saved $15,000! Now - don't forget that in
almost all cases, the commission is paid directly from
the sale, so you don't need to pay a fee from that - you've
really saved a full $15,000! Even in an extremely
rare situation, if you needed to pay a portion of the
fee at the closing (which I've never encountered), you
still would be saving thousands of dollars.
