The seller compensates the buyer’s agent from the proceeds of the sale, so the buyer is not on the hook for a payment. We surveyed agents and found that less than 1 out of 100 had a buyer pay their commission in the past. The rare exception is when a seller refuses to pay the full commission.

A buyer's agent takes a buyer through the search, offer, and closing process for a home. At closing, the commission checks are deducted from the proceeds of the home and paid to the agents.

Some agents and real estate companies offer buyer rebates or cash back as a way to attract buyers. Semya-Moya, for example, will match you with a top local buyer's agent and you could qualify for cash back.

Changes to buyer's agent commission may be coming

A November 2023 lawsuit found the National Association of Realtors (NAR), Homeservices of America, and Keller Williams Realty guilty of misleading sellers into paying high realtor fees.

Traditionally, the seller pays the entire 5-6% commission, which is then split between the seller's and buyer's agent. The lawsuit argued that this system unfairly inflates home sale costs for sellers, as they are required to pay commission to a buyer's agent who is working against their interests.

The verdict suggests that this practice could change, with buyers potentially responsible for paying their own agents' commission. 

While no significant changes are expected in the short term, we will continue monitoring the situation and updating our content accordingly.

» READ MORE:

• NAR lawsuit: After a $1.8 billion verdict, the clock is ticking on the 6% real estate commission
• Backgrounder Q&A: National Association of REALTORS

Why does a seller pay the buyer’s agent commission?

A seller pays buyer’s agent a commission as an incentive to the buyer’s agent to entice them to show the property. The thinking is that more showings will result in a higher price and a faster sale. When sellers offer a lower buyer’s agent commission, the property stays on the market for longer.

Who pays the buyer agent fee?

To decrease the out-of-pocket cost of selling a home, the seller pays the buyer’s agent from the proceeds of the sale. This allows buyers to buy a home with less cash and it allows sellers to sell more quickly. While buyer’s agents sometimes advertise their service as free to the buyer, there is evidence that this isn’t always the case.

In fact, you could easily imagine a scenario where the majority, if not all, of the buyer’s agent commission is incorporated into the price of the home.

If someone is selling a home for $100K and offering a buyer’s agent $3K, then they are willing to receive a final payment of $97K. Imagine now, that instead of paying the buyer’s agent, a buyer simply offers the homeowner $97K. The homeowner receives $97K in both cases, however, the buyer pays $3K less in the second scenario.

Both are technically true and depending on who you ask, you may get a different answer. As a buyer, what you need to know is that there is usually no out-of-pocket cost for you to work with a buyer’s agent.

When does a buyer have to pay their agent?

Buyers rarely have to pay their agents out of pocket.* The buyer’s agency agreement includes a provision to guarantee that the buyer’s agent gets paid, even if the seller refuses to do so. The particular section of the contract looks like this:

In the agreement, the buyer is responsible for paying the buyer’s agent if the seller does not pay. However, the buyer’s agent must first seek to get the fee directly from the seller. The particular contract in the example outlines the most common scenarios when something like this might occur.

• For sale by owner (FSBO): When an individual sells their home without an agent, they are often reluctant to pay a broker fee. Luckily, this scenario is relatively rare, and most experienced agents know how to work with the seller to get their commission.
• For sale by auction: Homes being auctioned off usually don’t have a seller’s agent involved. The compensation for representation on this kind of transaction will vary based on your location. It’s best to get an agent experienced in home auctions.
• For sale by builder: New construction projects usually offer compensation to buyer’s agents directly. However, some builders may try to justify lower rates with the relative simplicity of selling a brand new home, leaving the buyer to pick up the difference.

Read your contract carefully because these contracts vary between states and brokerages. Discuss the possibilities with your agent and get a firm understanding of if and when you would have to pay their commission.

*Note: We sourced the experiences of over 50 agents and found that buyers were on the hook for a commission only in extremely rare circumstances (less than 1%). In fact, most of the agents had only collected a commission from a buyer once or twice in their entire careers.

Is the buyer’s agent fee worth it for the buyer?

The accurate but disappointing answer is that a buyer’s agent fee is worth it in some circumstances. For example, it’s a common misconception that everyone shops for a home online, in fact, 52% of buyers report hiring a buyer’s agent specifically to help them find a home. Buyers who worked with an agent also appreciated:

• Help understanding the transaction steps (61%)
• Agents pointing out unnoticed features/faults with property (60%)
• Help negotiating better sales contract terms (48%)

Buyers that fall into one or more of these categories should work with an agent. Some buyers have been through the process multiple times, have a legal background, or are otherwise comfortable with the home buying process. For these buyers, a buyer’s agent is less likely to deliver significant value.

What work does a buyer’s agent do for a client?

A buyer’s agent helps a buyer navigate the search, offer, and closing process of a home. During the search process, an agent helps the buyer find properties, arranges showings, and gets any relevant information about the property like the tax statements and utility bills.

When the buyer is ready to make an offer, the buyer's agent analyzes competing properties, suggests a price, and writes a formal offer letter. This kicks off the negotiation process in which a buyer’s agent tries to get the best mix of price, terms, and concessions for the buyer.

Once the seller accepts the offer, the buyer’s agent pushes the home through the closing process. This involves getting a loan approved, monitoring all the dates and requirements outlined in the contract, and finally, attending the closing. The buyer’s agent is compensated only after this final stage is completed.

Can I save money on buyer’s agent commission?

A commission rebate is the simplest strategy buyers can use to get some extra money in the homebuying process. After the closing procedures and transfer of ownership, the buyer’s agent pays the client, completing the rebate. Unfortunately, some states have outlawed this practice, a move many researchers agree is anti-competitive and not consumer friendly.

We don’t recommend first time buyers employ advanced strategies when purchasing a home. The following strategies involve more work and risk, than a commission rebate:

• Skip the agent: If you don’t work with an agent, you can potentially negotiate a lower price with the seller.
• Agree to dual agency: Having the seller’s agent represent you can also save you money. Just make sure you’re comfortable representing your own interests.
• Become a realtor: If you have a few weeks or plan to buy homes as an investment, you might want to get your real estate license. As your own agent, you’ll be entitled to half of the commission at closing.

A much less risky way of saving on buyer's agent commission is to work with a realtor who offers buyer rebates or cash back. For example, eligible buyers who get matched with an agent through Clever can get cash back for the purchase of their home!

Key Takeaway

As a buyer, you won’t need to pay your agent out of pocket. Instead, the seller compensates both agents from the proceeds of the sale. Most buyers choose to work with a buyer’s agent, but many don’t know that they can get some extra money in the process. The easiest method to get extra cash without compromising on services is a commission rebate.

Related links

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Home Buyer Rebates: Get Cash Back When You Buy!

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The post Understanding the Buyer's Agent Fee appeared first on Semya-Moya.

Top Agents by State

What makes a top real estate agent?

Top real estate agents help the buyers and sellers they represent to get the best possible outcomes.

The best agents for sellers market their property effectively, get the price right the first time, and find a buyer faster than the average length of time. They’re also strong negotiators who can get their clients top dollar for their home. Top sellers’ agents:

• Sell properties quickly. Top agents sell properties more quickly than most agents in the area, and they do so consistently.
• Get the best possible price. Sellers who work with top listing agents generally get closer to their asking price than other sellers.
• Market properties effectively. Skilled sellers’ agents ensure their listings have high-quality, professional pictures and engaging descriptions. They market their properties on social media, the Multiple Listing Service, and other websites buyers use to find homes.
• Price properties accurately. Price reductions are rare for skilled agents. In fact, listings marketed by top agents generally see price reductions less than 5% of the time.

The best agents for buyers will show you the neighborhood, negotiate a great deal, ease your nerves, and teach you about the process. Top buyers’ agents

• Are solid negotiators. The top buyers’ agents typically save home buyers as much as 10% off list price.
• Know local neighborhoods. The best buyers’ agents know details about school districts, community amenities, neighborhood associations, and more.
• Are responsive. They’re able to work around your schedule to show you properties, and they keep you informed throughout the process.
• Guide first-time buyers through the purchase process. Top agents understand the challenges associated with purchasing a home for the first time, and they’ll mitigate them by walking you through the process.

What services do top real estate agents offer?

Top real estate agents are full-service agents that are there for you during every step of the buying and selling process. Here are the services you should expect from a top real estate agent:

How do you find the best real estate agent in your area?

The best way to complete each of the three steps is:

1. Know what to look for

Some of the key criteria to consider include:

• The total number of sales under the agent’s belt
• Past reviews
• The number of recent sales
• How many listings the agent currently has
• The years of experience
• The agent’s track record
• The agent’s experience with properties similar to the one you’re buying or selling (in terms of both price and location)

Looking at each of these criteria independently could be misleading. For example, an agent may have many positive past reviews but few current listings — which suggests they may no longer be as active in the industry or that the quality of their service may have declined in recent years.

But by looking at the big picture and considering all of these factors together, you should get an idea of how busy the agent is, what type of service they provide to clients, and whether they tend to outperform or underperform their peers.

2. Review lists of top agents

There are many resources you can tap online that provide lists of top agents. Some of them include:

• Zillow
• Realtor.com
• Clever

When you’re reviewing lists of top agents, it’s important to understand the criteria the website uses.

Ideally, the list will be developed using objective data, such as details on past sales and customer reviews. Most importantly, you’ll want to ensure that the company making the list is objective and that agents can’t simply pay to be included on it.

3. Do some in-person work

If you want to be as thorough as possible in finding the best agent, you’ll need to go beyond the world wide web and do some local research on agents in your area. Some of the steps involved include:

• Asking friends and family for referrals
• Looking at who is selling houses in your neighborhood and contacting the agents
• Visiting open houses to talk with agents in person and get an idea of their knowledge and responsiveness
• Setting up interviews with agents to discuss their credentials and allow them to present a plan for buying or selling your home
• Discussing pricing with agents you’re interested in working with

It’s best to interview several different real estate professionals to see who you feel most comfortable with and who comes across as the most knowledgeable and professional. Doing this last step can make all the difference in finding the perfect agent to meet your needs.

Clever can help by matching you to full-service agents from our partner network. When our concierge team matches you to agents, you can rest assured they have solid reputations and have bought or sold properties similar to yours. They’ve also agreed to accept discounted commissions or to provide buyer rebates where legal, so you can get top-notch service at the best possible price.

How does Clever select its top agents?

Clever knows that finding the right real estate agent can be a stressful and time-consuming process. We’ve done the legwork to make finding your perfect agent easier. Our thorough method of vetting and selecting top agents includes:

• Conducting a review of agents in the area
• Interviewing local buyers and sellers
• Developing a large list of real estate agents
• Eliminating any agents with problematic records, such as few reviews, a limited number of past transactions, negative reviews, or insufficient experience
• Doing a deep dive into data on each agent and analyzing their transactions
• Selecting top agents and providing the details on their strengths and weaknesses so you can decide which one is the best fit for your situation

Top Real Estate Agent Frequently Asked Questions (FAQs)

How many realtors should you interview?

It’s a good idea to review at least three real estate agents, so you can compare their offerings. You’ll want to find an agent that’s the best fit, so focus on their communication skills, their professionalism, their pricing, and their familiarity with transactions similar to yours.

Should I use the same agent to buy and sell a home?

If you’re both selling a home and purchasing a new one, using the same agent can simplify the process. But you’ll need to find an agent with a successful track record as both a listing agent and a buyer’s agent. While some real estate agents do both, some of the best real estate professionals specialize in either representing buyers or listing properties.

How much does it cost to hire a top agent?

Traditionally, sellers pay a 6% commission which is split between the buyer’s agent and seller’s agent. Buyers pay the commission indirectly because sellers price their properties to build in the cost of this commission.

However, when you work with Clever, sellers can find top agents who charge just $3,000 or 1.5% of your home’s price if your property is valued above $350,000. And buyers in eligible areas who work with a Clever agent will get a portion of the commission rebated to them.

What questions should you ask a potential agent?

Whether you’re hiring a buyer’s or seller’s agent, you should ask about their past experience. You should find out their plan to market a property you’re selling or how they will help you find the perfect home to buy. You should also ask how often they’ve handled homes in the price point and neighborhood that you’re selling or purchasing in.

The post Top Real Estate Agents appeared first on Semya-Moya.

When buying a home in Georgia, a factor you consider is how much the down payment will cost you. While this is definitely something you must budget for, there are numerous other expenses involved. It’s best to be prepared before beginning the home buying journey to prevent surprises from unexpected costs.

Making a real estate purchase in Georgia doesn’t have to be frustrating if you plan ahead. With the right savings strategy, you can streamline the process with little headache. One way to stay ahead of the curve is working with a local real estate agent who has a firm grip on the local market and its associated costs.

Want to connect with a top-rated, Georgia buyer’s agent? Clever can help! Fill out our online form and we’ll be in touch to answer any questions you may have and to introduce you to one of our local Partner Agents for a no-obligation consultation.

Closing Costs for Georgia Homes: What to Expect

The closing process is the final step before grabbing the keys to your dream home. Unfortunately, this exciting stage is also the time when buyers face the brunt of their expenses.

According to data from Bankrate, Georgia home buyers are expected to pay an average amount of $2,323 when closing on their property. While that may sound encouraging, the study failed to account for lesser-known fees like title insurance, title search, taxes, other government fees, and escrow fees.

To get a better grasp on all your obligations, consider that the median home value in Atlanta is $261,200 according to data from Zillow. In general, closing fees rack up to between 2 and 5% of the sale. This means a buyer should expect to pay anywhere from $5,224 and $13,010.

While closing costs can be expensive, one of the largest mortgage expenses is the interest rate. Over the life of the loan, a few small percentage points can result in hundreds of thousands of dollars in interest payments.

One of the best ways to lower your interest rate? Shop around and compare lenders! Fill out the form below for a quote from a licensed, local lender – even if you’re pre-approved it pays to compare.

Common Closing Costs for Georgia Home Buyers

While closing costs can vary dramatically based on your lender’s requirements and the value and condition of a property, there are several that you will always be responsible for in Georgia.

Appraisal Fee

Before a lender will move forward with a loan, buyers are required to hire a professional appraiser to value the property. This is to protect both the financial institution’s investment and ensure a home buyer is paying fair market value. Costs can vary but the service costs an average of $333 nationally.

Application Fee

A buyer is required to pay their lender a fee to process a loan application. This expense can mean different things depending on the institution. Sometimes, this service includes a credit check or even the appraisal fee — it’s important to know exactly what you’re paying for.

Attorney Fees

While this fee isn’t present in every state, Georgia is an exception and requires an attorney to sign off on real estate transactions at closing. The expense covers their charges to review each of the closing documents. Bankrate data says that on a $200,000 home purchase, an attorney charges about $721.

Home Inspection

In Georgia, a home inspection isn’t a required but an elected service. While it’s not a mandatory part of the process, skipping this step can cause financial devastation to buyers if expensive issues arise unexpectedly.

Discount Points

One discount point typically costs 1% of your home loan and can significantly reduce the interest rate. If your loan is $200,000 with a rate of 4.5%, buying two points can drop it to 4%, resulting in monthly savings of $58.54.

Title Fees

A title search and transfer ensure a property has no claims against it and that the legal ownership is successfully transferred from seller to buyer. You may also be presented with a title insurance policy to protect your investment if someone challenges your ownership.

Down Payment

Most lenders require a down payment at closing to prove you are reliable with your finances. The standard amount for the expense is usually 20% of the loan amount. Don’t get this cost confused with an earnest money deposit which is generally a smaller percentage presented to a seller when making an offer.

Additional Fees in Georgia

Many states have real estate transfer taxes when a property changes hands and Georgia is no exception. While these fees are typically the responsibility of the seller, it’s common that the obligation is passed to a buyer during negotiations.

The fee accounts for $1.00 per thousand (plus $0.10/hundred) based upon the value of the property.

Here are two other Georgia-specific tax requirements:

• Intangibles tax imposes $1.50 per $500 based on the amount of the loan and is required within 90 days
• A $10.00 tax is required for any loan subject in accordance with the Georgia Residential Mortgage Act

Without planning ahead for the additional expenses required to close in Georgia, home buyers may be caught off guard and forced to dip into their savings. Plan to work with a top-rated local agent so they can lay out exactly what to expect and get you ahead of the curve by creating a savings strategy.

Other Costs to Consider

In addition to a monthly payment, there are additional expenses that responsible homeowners must plan for.

Property taxes are a recurring fee that Georgia residents are required to pay annually. What you pay will largely depend on the county’s millage rate and a property’s assessed value. A licensed real estate expert can show you the requirements specific to the area.

Other fees you can expect include homeowners’ insurance, utilities, and costs to maintain your investment. Owning a home is an expensive venture that costs more than many expect. Don’t find yourself in a credit-crippling foreclosure or bankruptcy because you made a jump into ownership before being financially stable.

How to Save on Closing Costs in Georgia When Buying a Home

The good news for buyers is there is a way to ease the expenses of closing. One way is to work with an expert negotiator who can bargain with a seller’s agent to share some of the responsibilities. They will use their knowledge of comparable homes, minor repairs the property requires, and the current market temperature to negotiate terms in a buyer’s favor.

Georgia residents can also take advantage of government assistance like the Georgia Dream Homeownership Program and Fulton County HOP to lessen the expectations of a down payment. To qualify for these incentives, home buyers must meet several requirements.

Clever can help buyers save on closing costs, too. When buying a home in Georgia with an agent in the Clever Partner Network, home buyers are eligible for Clever Cash Back. What are you waiting for? Fill out this simple online form to connect with a Clever Agent.

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The post Georgia Buyer Closing Costs: How Much Will You Pay? appeared first on Semya-Moya.

Find out why below the table!

Real Estate Agent Earnings by State

We used 2019 data on agent and broker earnings by state from the Bureau of Labor Statistics (BLS) to populate the table above. The states are ranked by average income, which is reported by the BLS based on their methodology. Income for the top 10% of earners represents the minimum that the agents in that group make.

The earnings data are self-reported and may misrepresent the income of agents in a given year. Self-reported data may be inaccurate for a variety of reasons, including that agents with lower incomes may be less likely to report them.

The earnings displayed don’t factor in costs that a real estate agent incurs to sell a home. A recent MIT study estimated that agent costs are as high as 80% of observed revenue.

How are agents paid?

Agents earn a commission for helping a client buy or sell a home. The commission that agents earn is a percentage (usually 6%) of the home price. For most transactions, there is a buyer’s agent and a seller’s agent that split the commission in half. Each of those agents also has to split their commission with their broker.

What influences how much real estate agents earn?

• Gender: Women earn almost half as much as men.
• Experience: More experienced agents tend to earn more.
• Hours worked: Agents that work longer hours make more money.
• Location: Agents in metropolitan areas have higher average incomes.
• Franchise affiliation: Working with a franchise for longer results in higher earnings.

Gender

Real estate is not immune to the gender pay gap; in fact, women earn 47.46% less than men in the real estate industry. [1][2]

We concluded there is no evidence that age and experience can explain the gap in pay. The ratio of male (33%) to female (67%) shows little variation across all ages and experience levels.[3][4]

Promotions to manager and broker may explain the higher pay gap. The data shows that men get promoted to higher paying positions more often than women. Men represent 33% of all realtors, but they account for 50% of broker-owners and 42% of managers.[5] While all realtors had a median annual income of $41,800 in 2018, the broker-owner and manager roles earned $86,100 and $93,200 respectively.[6]

Experience, Referrals, and Repeat Business

Agents with more experience have higher incomes, in part because they rely more heavily on referrals and repeat business. The largest income increase from $9,300 to $42,500 occurs in the first five years of an agent’s career.[7] In the first two years, 55% of agents have no referral business, and 74% report no repeat business, respectively. By year five, those figures increase to 84% and 73%.[8][9]

Multiple academic studies cite the positive correlation between the experience of agents and the income they earn.[1][10] Interestingly, real estate agents with 15 or more years of experience demonstrate a negative relationship between experience and earnings.[2]

Specializing and putting in the hours

Agents that work in real estate full-time tend to earn higher incomes than agents that only did the work part-time.[2] In fact, the leap from 20 to 39 hours of work per week to 40 to 59 hours of work per week allowed agents to more than double their incomes from $30,800 to $64,400.[11]

The most important factors contributing to success for high-earning agents included: (1) the number of hours worked, (2) working full-time, and (3) working on the weekend.[1] This was confirmed by researchers that found effort (hours worked) and specialization (concentration of income sources) were positively correlated with real estate agent income.[12]

Location

Academic studies have found positive links between working in a metropolitan area and higher realtor incomes. [10] According to Douglas Elliman, a third of its agents work in Manhattan and brought in 11.8 billion, or 40%, of its revenue for 2019, providing additional evidence for this conclusion. [13]

We conducted our own research comparing the home values of various states and realtor incomes. Our findings indicated that individual agent incomes and property values were closely related. We found that available inventory for agents, or the total value of residential properties in a state, had a positive correlation with agent incomes. Interestingly, we also found that top-performing agents did only slightly better in states with high property inventory. [14][15][16]

Commission Structure & Franchise Affiliation

Franchise affiliation, firm size, and firm reputation were all found to have a positive impact on overall real estate agent earnings.[1][10] Amongst high earners, the length of the affiliation with the current franchise also had a large impact, [1] presumably due to better commission splits.

Research has shown that agents gravitate towards better commission splits. In 2019, Realogy (a brokerage holding company) indicated that competition from agencies that offered better commission splits was a key risk to its business. [17] Realogy employs 189,000 agents in the United States and owns Century21, Coldwell Banker, Sotheby’s, and Better Homes.

Advantageous compensation structures let agents keep more of the money they earn. From lowest take home pay to highest, agent commission splits include:

• Fixed commission split: No matter how much the agent makes, the money is split along a certain ratio with the broker.
• Graduate commission split: The more an agent makes the lower the split is with the broker.
• Capped commission split: Once an agent makes more than a certain amount, there is no longer a split.
• 100% commission: The agent retains the entire commission.

The share of real estate agents taking home 100% commission rose from 9% to 17% as experience increased from 2 years to 16 years.[18] Earnings verify that this is a positive choice for agents. Rising gross earnings were almost always associated with shifts toward graduated, capped, and 100% commission splits.[19]

The post How Much Do Real Estate Agents Make? And Why? appeared first on Semya-Moya.