One of the questions that I hear when I am working with first-time home buyers is, "How does a Realtor get paid"? According to the National Association of Realtors, 88% of home buyers used a real estate agent when buying a home and approximately 91% of homeowners used a Realtor to sell their house in 2016. Based on these numbers, it’s obvious that there are many people working with Realtors every day. There are also predicting that the “Gen Y” home buyers will be entering the real estate market with a bang during the next few years. This means that an influx of home buyers will be entering the market for the first time. Many of these first time home buyers have no idea what a Realtor actually does, or how they get paid.
I recently met a nice couple looking for a new home in the White Caps subdivision in Kenosha Wisconsin. They have never bought a house and had many questions when I met them. They had been looking at homes online for a couple of months, but they were finally ready to get serious about home ownership. One of the first questions that they asked me was “How much do we have to pay you to help us find a home?” This is a common question for first-time home buyers. When I told them the answer, they were relieved. Here’s why:
As a home buyer, you can choose any real estate agent in Wisconsin to work for you at no expense to you. For first time home buyers, this is very important information. Since there are many steps in the home buying process, it makes the most sense to start finding a Realtor as soon as you are ready to pursue home ownership. Their services are free to you, so you might as well use them to their fullest potential. Ask them as many questions as you can. A professional Realtor such as myself looks at homes every day. We have seen hundreds to thousands of homes at this point in our careers. Our knowledge of the industry is invaluable to consumers.
Now that we know who pays the Realtor fees in a real estate transaction, let’s look at how a Realtor gets paid.
When a Realtor is working with you to find you a home, they know that they will not make a dime unless you purchase a house and use their services to do so. It’s not enough to simply get a contract signed. Real estate agents have to stick with the transaction and make sure that it makes it to the closing table, or they will not get paid. The seller will pay the Realtor fees out of the proceeds from the sale of their home (if there is enough equity). If the deal falls apart before making it to closing, the Realtors will typically never get paid for their work. This is one of the reasons that being a Realtor is difficult.
So now that you know how and when a Realtor gets paid you can find a great one...Myself included and let them get to work for you without fear of getting stuck with a bill you were not expecting.