When you are buying your first house, there is no room for error since it is a once in a lifetime purchase that is both expensive and complicated. From making sure you are choosing the right property to taking care of the offers and documentation, everything needs to be perfect and precise.
But since most people aren’t familiar with the real estate market and they don’t want to subdue the challenges by going through the real estate lexicon, they stick with a buyer’s agent. A buyer’s agent acts as a guide throughout the real estate purchase process. From combing through the available options to negotiating on your behalf, a buyer’s agent’s role is very broad.
With so many listings and with so little knowledge about the real estate market, it makes sense to choose a buyers agent but there are a couple of things that you should know about buyers agent before scouring the internet for one. The most important thing is how a buyer’s agent charges for his service?
If you want to ameliorate the real estate purchase process and are planning to work with a buyer’s agent then you have come to the right place. Here, we will look at how buyers’ agents charge for their service so that you can be better prepared for such expenses.
The basics of the pricing structure of a buyer’s agent
A vast majority of the homes are sold and bought through agents since the selling and purchase by only buyers and sellers take up only an estimated 7-11% of the market. This is why it becomes necessary to understand the basics of the buyer’s agent fees.
Since all the buyer’s agents work on a commission model for their fee, they are paid only when the homes are bought and they don’t get paid until after settlement. The buyer’s agent is going to work hard for you and make sure that you get the best property since apart from the ethics of real estate, their commission is also dependent upon it.
In most cases, the buyer’s agent can charge anywhere around 6% of the commission. The total commission charged is split between both the buyer’s agent and the seller’s agent. But the complete 6% is not divided between the buyer’s agent and the listing agent. Even the listing broker and the buyer’s agent’s broker take a share of the commission.
Who is responsible for paying the commission of the buyer’s agent?
The buyer is going to split the commission fee with the seller’s agent and the total commission usually ranges between 5-6% of the purchase price of the house. Although this commission fee is mostly paid by the seller, it is always factored in what is the amount for which the house has been listed.
By the look of things, it might seem like the seller will have to pay the commission fee but since the fee is baked into the listing price of the house, it is paid by the buyer at closing, and therefore, the buyers advocate South Australia is passed on to the buyer when he purchases a house. In other words, it usually comes from the mortgage on the home.
According to the standard practices and the real estate lexicon, it is the responsibility of the seller to pay the real estate commission of both the buyer’s agent and the listing agent. But while the seller pays the fee, it is usually baked into the price of the house. So, it will not be wrong to say that the buyer’s agent fee is paid by the buyer.
The provision of buyers always paying the commission fee can be argued because if you delve into the real estate process, you will realize the commission fee is a part of the sales price. But it doesn’t matter how hard you try, you have to pay the buyers advocate South Australia fee at closing.
Is the fee of the buyer’s agent tax deductible?
Anyone can take advantage of the skill, time, and knowledge of a buyer’s agent and this might be the reason why so many people offload the hassle involved in buying a property on a buyer’s agent by choosing an Australian buyer’s agency.
In many cases, people have claimed that they wouldn’t have been able to buy a property if they were not working with a buyer’s agent provided by an Australian buyers agency. But the one question that pops up in the mind of many people is whether the buyer’s agent taxes are deductible or not?
The purchasing cost, including the fee charged by the buyer’s agent, can become part of the cost base when purchasing an investment property, bringing down the capital gain tax an investor would have to pay when it comes to selling the property. But, the buyer in this case can never claim the buyer’s agent fee is tax-deductible.
How to choose the right buyer’s agent?
Scour the internet for the best buyer’s agent instead of settling on whichever agency appears first on the list. Although your decision of choosing an agent shouldn’t solely depend on the fee charged by him or her, the price should always be an important point of consideration while filtering out the available options.
Many agents boast about hard-to-believe commission fees to enthrall the client but you should never succumb to such false claims. Make sure to conduct a background check of the agent before making your final decision.
Choosing the right type of buyer’s agent might take a little bit of time since the internet is inundated with buyer’s agent agencies. But never forget to first fathom the pricing structure or simply the fee agenda of the agents before making the final decision.
Furthermore, make sure that there are no hidden fees as this might give you bad financial surprises at closing and you might end up paying even what you were not prepared for. So, use this blog post as a guide and choose the best buyer’s agent.