If you’re new to home buying, you’ll need to quickly understand the roles of buyer’s agents and seller’s agents. They’re the power players in your property journey, and with the new NAR settlement shaking up how commissions work, it’s time to get the full scoop. Let’s break it down and arm you with the knowledge to make smart moves.
Buyer’s Agent vs. Seller’s Agent: what’s the difference?
Buyer’s Agents. As the name implies, they work for the buyer and are legally required to advocate for their interests. But, more than that, these agents are your ticket to finding the perfect home. They’re in your corner from start to finish—scouting properties, negotiating deals, and guiding you through closing. They’ve got the insider info on market conditions and help set a fair offer price. They’re all about getting you the best terms—price, contingencies, and closing costs—so you can snag your dream home without a hitch.
Seller’s Agents. They work for the seller and it’s their job to sell the house quickly and for the highest possible price (or whatever the seller wants to prioritize). They handle everything from listing your home and marketing it to organizing open houses and showings. They’ll advise on setting a competitive price and negotiating offers. They also manage the entire transaction, ensuring everything’s legal and smooth until you close the deal.
Can one agent represent both buyer and seller?
Yep, it’s called dual agency. One agent can represent both sides in a transaction, but it’s not as simple as it sounds. Dual agency means the agent is supposed to balance interests, which is strictly regulated to ensure fairness. They need to disclose this role and get consent from both parties. It might streamline the process, but you’re missing out on having a dedicated advocate fighting just for you.
Why go with separate agents?
- Dedicated Representation: Each agent is laser-focused on their client’s goals. The buyer’s agent is all about finding the best property and negotiating the best terms for you, while the seller’s agent is out to get the highest price and best terms for their client. This ensures each party’s needs are fully addressed.
- Reduced Conflicts of Interest: Separate agents mean no split loyalties. Each one is solely dedicated to advocating for their client’s best interests, reducing potential conflicts that can arise in dual agency situations.
- Enhanced Negotiation: With separate agents, negotiation is on point. The buyer’s agent works to get you favorable purchase terms, while the seller’s agent fights for the highest sale price and best terms. This balanced approach can lead to better outcomes for both sides.
- Increased Expertise and Focus: Specialized agents mean more expertise. The seller’s agent hones in on marketing strategies and pricing, while the buyer’s agent zeroes in on finding properties and navigating the buying process.
- Better Communication: Separate agents mean clearer communication. Each agent handles their client’s concerns directly, ensuring effective and efficient dialogue throughout the transaction.
While dual agency might seem like a one-stop-shop, separate agents offer more dedicated representation and better negotiation, making for a smoother transaction. Of course, all this assumes that the agents are on the level and not just looking out for their own interests (e.g., selling faster than they should or pressuring you to buy when it might not be the right time). It’s important to find someone you trust.
How much do agents make in commission?
Traditionally, real estate agents earn about 5-6% of the home’s sale price, split between the buyer’s and seller’s agents. For a $450,000 home, each agent would make about $11,250 to $13,500.
But hold on—the NAR settlement is changing things. The buyer’s agent might now negotiate their commission directly with you, which could mean a flat fee, a percentage, or an hourly rate. Just know that they used to make about that much.
How does commission differ for buyer and seller agents?
Things are shifting. Historically, both buyer’s and seller’s agents received around 2.5-3% of the home’s sale price each. With the new NARS settlement, the buyer’s agent will need to negotiate their commission directly with you. This could mean more flexibility but also more negotiation. The seller’s agent is likely to stick with the traditional commission rate, but the buyer’s agent’s commission is now up for discussion, along with who pays it.
Buyer’s market vs. seller’s market: how commission negotiations vary
In a buyer’s market, where there are more homes than buyers, you might have more leverage to negotiate with sellers to cover the buyer’s agent commission. Conversely, in a seller’s market with high demand and fewer homes, sellers may not need to offer such concessions, leaving buyers to cover the commission.
Conclusion
Stay sharp and adapt to the new rules. Understanding the roles and changing pay structures of buyer’s and seller’s agents is essential. But it also means you’ll need to do your own homework and be careful about what information you trust.
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.