Pay Your Buyer Agent Directly & Save Thousands when Buying a Home

Pay Your Buyer Agent Directly & Save Thousands when Buying a Home
by Dave Williams

The title probably give it away, but would you like to know how to save thousands of dollars when buying a home?
Yes, pay your buyer agent directly.  Right now it’s very common for the seller to pay all the real estate fees, both the listing agents fees and through co-operation of the brokerages the buyer agent’s fees as well.
While this is a great arrangement for helping buyers reduce the costs associated with buying a home while giving them high level protection from a professional REALTOR®, it’s actually a practice that is costing them thousands in the log run.
Early in my career I helped a young European couple buy a new condo construction.  After the deal was done they pulled out a check book and asked about me fee.
“No need, the condo companies broker will pay me.”
“Where does that money come from?” They asked…
“Well it was part of what you payed for the condo, so it’s rolled into your mortgage…”
I’ve never though the seller paying for a buyer agents fees was a good deal again, because really as a buyer YOU ARE PAYING both agents fees from your mortgage with interest.
Grumpy Cat Meme: Stop trying to save me money with logic.Let’s look at an example.
A home sold for $250,000 might include $12,500 in commission, at the minimum the buyer agent is usually collecting $6,250.
$6,250 added to your mortgage, about $30 extra a month on your payments, based on a 25 yr @ 3.04%.
This will cost you an extra $2,661.88 in interest for a total of $8,911.88 by the end of your mortgage.
On a $500,000 home purchase you will pay an extra $5,323.76 in interest over the course of a 25 year mortgage.
The current system works well as it allows buyers to make a home purchase while protected without having the added worry of paying their REALTOR® fees.  However there is a cost to this luxury, in any circumstance where you can afford to please pay your REALTOR® fees directly and not with mortgage money.  (the same can be said for any fees you can roll into your mortgage.  You are better served by paying them outright.)
Hope this helps you understand real estate a little better.
As always if you have any real estate questions ask them below, or contact us directly at 613-788-2113
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