Well, should you? NO! You should never agree to pay a "transaction fee" or any other kind of additional add-on fee to a Buyer's Agent. Never, ever!
To understand why we believe this, let’s look at an example: A home is listed for sale with an agent. Mr. and Mrs. Seller and their agent signed an agreement to list the house for a 5% commission. The Listing Agent is going to keep 2% for their portion and offer 3% for any Buyer Agent. In this example, the Buyer does not directly pay their agent for their services. The commission is being paid by the seller. The Buyer's costs include their lender's closing costs, some title costs, and maybe their down payment.
Does the Buyer's Agent deserve more than this example’s 3%? You can see in this example, that the Listing Agent is taking less. They probably negotiated the commission with the Seller, to be competitive to get the listing. Let's say the house is an average house in Lawrence, which would make it around $250,000. 3% commission on such a house is $7,500. If the agent put in 25 hours of work on this one transaction, which is quite a bit, that's $300/hr. For a $350,000 house, that would add up to $420/hr.
We wouldn’t blame anyone for thinking this is kind of steep, but there’s something home buyers and seller should always keep in mind: Commissions are negotiable, they are not set in stone! Some agents charge a "transaction fee" over-and-above the commission. This is typically a one-time fee, due at closing from the Buyer. No one should ever agree to this, in my opinion. If one does agree to pay such a fee, I hope it comes with something really fancy to justify it! But whether you do, or do not agree to pay your agent more than what they receive as a commission, you should have a conversation with your agent about how, and how much, they get paid before you begin your home search in earnest. That way issues regarding compensation don’t interrupt the search for the perfect house!
It is one of my core beliefs that consumers should be empowered. Knowing that this practice exists in the real estate industry is one of the ways that consumers can make educated choices! The public already thinks real estate services are over-priced. Practices like this do nothing to improve the perception of real estate agents.
At R+K Real Estate, we are the transparent alternative! We do not engage in charging transaction fees. Instead we offer our Buyer clients Rewards! Imagine buying a $200,000 house and getting up to $2,000 back in Rewards. We will never charge extra fees to our clients. Instead we give back. That is what we call Empowerment!
At the most basic level, we believe in doing what's right. Pretty simple.
Interested in working with an agent who not only provides the full service you'd expect when working with a REALTOR, but also empowers you with Rewards? Call, text, or email us today, or Check out our Buyer Agent Services page to find out more!