If compensation is removed from the Multiple Listing Service (MLS) and more buyers choose to pay their agent directly rather than having the seller pay for them out of their equity, there may be more than one way to compensate your agent.
- Percent of Price – This is how traditionally agents have been paid their commission. You agree to pay your agent 1% to 3% of the purchase price of the property. Buyers will continue to pay a percent, but if they have to come out of pocket to do so rather than the seller paying this bill, this percent my go down. I believe most buyers will be willing to pay at least 1% for professional representation.
- Unbundled – When you pay an agent 2% to represent your interests during the home buying process, you receive all of their services in that percent. This will include showings, writing up offers, inspections, disclosures and everything that goes into buying a property. But, some companies will charge separately for each of these services. You may pay a fee for every home shown, every offer made, every inspection attended by your agent and so forth. By unbundling, your agent gets paid for every activity and you may pay less.
- By the Hour – Attorneys are paid by the hour (actually, by the minute). Right when you sit down to discuss your case or legal need, the clock is ticking. Some attorneys I work with charge me $650 an hour for their expertise. It could be that an agent offers something similar. The agent charges you $175 an hour. If they show you 10 homes, make 2 offers, have one accepted at a price of $750,000 and they handle all the paperwork, meet the timelines and assist with the inspections, they may spend 60 hours helping you with the purchase and charge you a total of $10,500 for their time. That is still far below paying them 2% of the purchase price.
- Flat Fee – This is our business model. You pay a flat fee for the use of our services. There are no surprises, and whether we negotiate the seller to pay this fee or you pay us directly, you know up front what our cost will be.