Why do you need a realtor?
You can buy a house without a Realtor, no one is stopping you! But you need a Realtor because buying a house is complicated stuff. Lots of things can go wrong. Lots of EXPENSIVE things. Things as simple as initials missing from a page or two, or a communication not being documented can cost you a LOT of money. And by a lot I mean THOUSANDS of dollars. Realtors go to school and are trained for this stuff. They know what to do and how to do it. On top of that, buyers are protected by state required insurance that Realtors HAVE to have. The legal wording in contracts is not fun stuff, but we speak that language and make sure you know what you are getting into.
My services cost you nothing! Wait what???
So how is it possible that my awesome real estate skills and services will cost you nothing?? Well technically they are not free, but they will cost you nothing because they are paid for by the seller. So am I working for the seller then?? No, no, no. That does not mean I am working for the seller HOWEVER, in the typical real estate transaction the owner selling the house is paying anywhere from 4-6% of the selling price to the real estate agent that he or she hired to sell their house. Well that sounds like a good chunk of money doesn't it? Not so fast! Read on to the next section to find out why its not and how a buyer's agent gets paid.
So what DO Realtors make???
So sellers are paying their agent maybe 4-6%. Usually, and rightfully so, buyers do not want to use the sellers agent to buy a home. Buyers want their own agent. Why you ask? Well the agent selling the home is representing the best interests of the seller. Buyers want an agent that represents their best interests. So you have this selling agent getting 4-6% of the selling price now, but no way to really get buyers. That's where buyers agents come in. The selling agent offers to split this commission with any agent bringing them a buyer for the home they are selling. That split is usually a 50% split. Well that's still a good chunk of money right? Well, not so fast! Selling and buying agents do not get to keep all of that "half" commission. All agents HAVE to be sponsored by a broker. It's the law. A broker is basically a real estate company like Keller Williams, Coldwell Banker, CJ Brown, etc,etc.... We Realtors have to split that half of the commision we get with our broker or real estate company. Agents end up keeping anywhere from 50% to 90% of that HALF comission we got. Some poor souls even less than that! Then factor in the costs for yearly license fees, paying for state required continuing education, insurance, advertising, board fees, MLS fees, and a bunch of fees I am forgetting, it doesn't seem like so much. You do well by doing a lot of transactions. I am not going to lie to you though, hard working agents, can make a good living. Oh, and good LORD I forgot taxes!!! Yes, we all have to pay taxes on our income right??!!