What Does a Real Estate Agent Cost?
Real Estate Agents and Costs
There’s definitely a learning curve when it comes to buying your first home. Most first-time homebuyers focus on saving for a down payment and the other initial costs of home ownership. Unfortunately, some new buyers hesitate to hire a realtor to help them find the right home, because they don’t understand the cost structure. They may think they can do most of the work themselves, simply by searching online real estate sites. That is usually a mistake.
Real Estate Agent Fees
Generally, real estate agents receive a commission when the property sells. It’s the seller who usually pays the commission, not the buyer. Normally, the amount of the commission is split between the seller’s agent and the buyer’s agent, but the buyer makes no direct payment.
The typical commission in the Honolulu area is 6 percent of the sale price, so the seller’s and the buyer’s agent each receive 3 percent. Keep in mind that unless the real estate agent is also a broker/owner –i.e., owns their real estate brokerage company –that 3 percent commission is also split with the real estate brokerage.
It is possible to pay less in commission, via so-called competitive commissions, which range between 5 and 5.5 percent. There are also “very competitive commissions,” which run between 4.5 and 4.99 percent. Commissions are negotiable, and the seller can discuss the issue with potential agents.
While a seller may decide to save some money with competitive commissions, it is key to remember that you get what you pay for. In a hot market, competitive commissions may make sense, since your home is likely to sell quickly. In an average or slow market for sellers, a full-service agent puts in the time and effort necessary to market homes and close a deal. For sellers, a lower commission means the agent has less motivation to sell that particular home and attract buyers’ agents, and also does not have as much money to spend on advertising and other marketing necessities.
Real Estate Agent Value
A real estate agent is a licensed professional, bound by the National Association of Realtors’ code of ethics. The agent represents and protects your interests. Because the agent knows your budget and the type of property you seek, you waste less time visiting unsuitable houses, and time is money. The agent knows the area, and its pros and cons, in a way an unfamiliar buyer cannot. Agents know the current temperature of the market and whether buyers or sellers are benefiting.
Once you find the right home, your agent can help negotiate the price with the seller’s agent. Your agent knows of possible issues that might demand a lower price, saving the buyer a significant sum.
Because home buyers require other professionals, such as appraisers, attorneys, mortgage brokers and more, your agent can provide recommendations. This helps speed the entire purchase process along.
If you’re looking to buy or sell a home or find a rental property, you need a knowledgeable, experienced realtor familiar with every aspect of the Hawaiian real estate market. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.