“In some states a buyer is required to sign a buyer-agency agreement with a [real estate agent] that expressly states that the [real estate agent] will earn a commission if the buyer purchases a home during the term of the agreement,” says real estate expert Michele Lerner.
Do you owe a real estate commission if you find a home yourself?
If you signed anything at the beginning of your relationship with your real estate agent, go back and read the document to see what your obligations are to your agent.
The details of your agreement will outline if you are obligated to pay commission to your real estate agent. Normally, commission is paid by the seller anyway, so if your agent is due commission, the seller’s agent would have to split the fee with your agent.
However, if your real estate agent has done a lot of work for you, it’s ethically correct to make sure the agent is compensated for her time. It’s one thing if you spoke with someone briefly then found the home on your own. But if the agent has shown you many properties and given you information about the market, that’s valuable data that almost certainly helped you identify the home you ended up buying.
“Your [real estate agent] has worked hard on your behalf, so even if you found the home you want to buy on your own, this doesn’t mean [the agent’s] time was worthless,” says Lerner.
What a buyer’s agent does to earn commission
It’s in most buyers’ best interest to work with an agent during the buying process.
“Finding the home is only the first step,” says Bruce Elliott, a Realtor® and ORRA president in Orlando, FL. “Your buyer’s agent can still be your ‘advocate’ and provide valuable assistance throughout the buying process.”
Here are some things a buyer’s agent does even after you’ve found a property:
- Provide objective information about the property and the local community, including information on utilities, zoning, schools, and more.
- Help you negotiate the terms of the sale, including price, financing, date of possession, repairs or compensation for problems found during the inspection, and the inclusion or exclusion of furnishings or equipment.
- Advise you on investigations and inspections that are recommended or required, including for termites, dry rot, asbestos, lead, roof condition, septic tank and well, and radon, in addition to a typical inspection.
- Offer contacts for inspectors, mortgage brokers, real estate lawyers, lenders, and other professionals you need to help you buy the home.
- After the inspection, your real estate agent can help you understand the inspector’s report and advise you on what to ask for from the seller.
- Your agent will be familiar with the process of closing on a home in your area. It’s very different depending on your state and your market, and your agent will be able to tell you what to expect, what is reasonable, and help keep you on track with your funding during the process.
- When a problem arises (and it always does), your agent can negotiate with the seller’s agent to find a way to keep the deal moving. Whether it’s an issue with your financing, a delay in closing, more problems than expected in the report, or a million other little problems, your agent knows what to expect and will ensure that your closing happens.
- In some states, real estate agents and not lawyers write the actual contracts. That’s definitely not something you want to do yourself.
- Be there for you during closing, to whatever extent you need.
As you can see, there’s a lot that happens between finding a house and signing on the dotted line. Anyone can find a listing, but it takes experience and skill to successfully navigate all of the moving parts of a real estate closing. Especially for first-time homebuyers, the process can be confusing.
Knowing you have an experienced real estate agent by your side throughout the closing journey is almost certainly worth the cost. And don’t forget, the seller usually pays the commission for agents on both sides of the deal—so you might not even have to open your wallet.