Paying additional fees in order to make more money may not make sense. There are several reasons why this actually works though, and they are explained in further detail below:
The average fee paid to a Buyer’s Agent is 2.5-3% of the sales price of the home (typically excluding any concessions are given) for a total of 5-6% after accounting for the Listing Agent’s commission.
However, an article from NAR (Tracey, 2023) discusses a couple ways in which not paying a Buyer’s Agent can be costly-
- Sellers who do not pay a Buyer’s Agent on average receive $46,603 less in the sales price
- Homes that sold without an agent typically take 53% longer to sell, resulting in more taxes and utilities having to be paid, as well as additional maintenance and risk of possible repairs being necessary
- Even after there is a signed contract the Buyer typically still has an inspection period during which they are legally allowed to negotiate and/or back out. An inexperienced negotiator may make more allowances than necessary
There are additional benefits to paying for the Buyer’s Agent that may not have direct monetary savings, but that can affect the ease, amount of risk- and which may also impact the bottom line Net Out. This is the final check value that the Title Company will give you before you walk away from the closing table. These are two additional advantages to paying a Buyer’s Agent- having agents that will represent each side in a legal and ethical manner at a closing table and regulated Title searches to further reduce your risk.
These benefits (bullet points below) come directly from an article by a University of Washington Law School, and can be fact-checked at Nolo Legal Encyclopedia (Bree, 2023).
- “Arranging for individual visits to the property; if you’re no longer living there, most likely by providing a lockbox for use by other Realtors, and meeting with prospective buyers who don’t yet have their own agent
- Answering questions and providing documents such as disclosure packets (in which you detail concerns about the house’s physical condition and related matters) to potentially interested buyers and their agents
- Holding one or more open houses, possibly including weekday open houses for other real estate brokers to visit as well as weekend open houses for the public (which itself involves many tasks, such as arranging for and putting out signs in advance, and providing food for the broker’s open houses, as is traditional in some areas)
- Receiving offers to buy your house, whether via email/mail or in person if other agents wish to formally present their offers
- Helping you evaluate the strength of each offer and strategize on issues like whether to accept or reject an offer outright or make a counteroffer, how to deal with unusual terms like an escalation clause, and whether to also look for or arrange a backup offer.
- Negotiating with the buyer’s agent until the purchase contract is complete (although this task might fall more to an attorney in states where legal help is required”
If you would like more information, The Dave Team provides free consultations to both buyers and sellers, so give us a call today at 810.887.9434, or email [email protected]!
References
Sell Your Home FSBO or With a Real Estate Agent?. Bree, I. (J.D.- Prof at University of Washington Law School). 2023, Nov 02. Nolo Legal Encyclopedia.
https://www.nolo.com/legal-encyclopedia/real-estate-agent-sell-house-30259.html
Why FSBO’s Say They Regret Not Using A Real Estate Agent. Tracey, M. 2023, Dec 5.