The common question amongst first time home buyers is always: How much do Real Estate Agents charge?
Obviously we’d all like to cut costs wherever possible in life. Especially when we’re making the biggest purchase we’ll ever make, like buying a house. And especially when we live in the lower mainland and are considering entering the BC real estate market!
Real estate is expensive enough without adding in Realtor fees and other home buying expenses. So that leaves us with the question… How much do Realtors charge home buyers?
The Answer: They’re FREE! When you are purchasing property, the Realtor working on the buyers behalf is paid a portion of the sales commission from the sellers Realtor. So you are only paying for a Realtor when you are the seller of a property.
Typically in BC, home sellers pay 7% of the first $100,000 and then 3.5% on the balance. This depends on the Real Estate Agent though, so it’s best to ask them directly for their cost up front.
Is It Worth How Much Real Estate Agents Charge?
There are so many good reasons to have a Realtor when you are buying a house.
First off, they’re FREE! Home buyers should always take advantage of having someone who knows the purchase process, especially when that knowledge comes at NO COST!
So yes, it’s worth how much Realtors charge home buyers.
Realtors have education and experience that helps when searching for homes within your specified area and budget. They have a network of industry contacts that they can call on to help. They also have knowledge about specific cities and neighbourhoods. This can come in handy if you’re open to looking at different areas or if you’re set on one specific town.
Realtors are also on your team to negotiate. They know property values and they know what’s fair. This can help when you are trying to put in a competitive offer, when you are entering a bidding battle, or when you should walk away.
In addition, paperwork can be a nightmare! There are tons of documents to sign, copy, and file away. Instead of trying to keep track of all of the documents you need, to ensure your purchase is filed correctly, leave it to your Realtor to figure out! No matter how organized you are, this paperwork is stressful (understatement).
Finally, one of the best reasons to hire a Realtor is to answer all of your questions. You will have hundreds of them! Everything from property value, to closing dates, to legally filing with the city. There are going to be various things that pop up along the way and it’s always nice to have someone knowledgeable that you can trust to ask.
Costs of Buying a House
Now that you no that there is no cost to hiring a Realtor when you are purchasing a house, it’s time to learn about what you do have to pay for. There are so many unexpected costs for first time home buyers. Like anything, you learn as you go. So if you are buying a house for the first time, it is going to be a learning experience.
CIBC offers this great list of additional costs to expect when purchasing a home. The list includes:
- Property Valuation Fee ($150-200)
- Home Inspection Fees ($500-1,000)
- Property Survey ($750-1,000)
- Land Transfer Tax (varies based on province but anticipate $3,000-8,000)
- Legal Fees (varies based on legal needs but anticipate $1,300-2,500)
- GST (varies based on purchase price)
- Title Insurance ($250)
- Insurance Costs for High-Ratio Mortgages (varies based on principle and mortgage amounts)
- Interest Adustments ($100-1,000)
- Prepaid Property tax and Utility Adjustments (varies based on previous owners but anticipate $400-1,000)
- Home Insurance ($450 per year)
Buying a House Without a Realtor
Although it’s stressful, time consuming, and unnecessary – if you want to purchase a house without a Realtor to help you, you are allowed. This process will take much longer than if you were to hire a Realtor, because there is a learning curve that comes along with it.
You do not have the same knowledge and experience as a Realtor, who has done this numerous times. Therefore you will have to learn as you go and build extra time into your purchase contract for figuring things out. Sometimes sellers want to work quickly, so you will have to make sure the time frame agreed upon is long enough for you to get the necessary documents and paperwork sorted out.
Here is a simple list of steps explaining how to purchase a house without a Realtor:
- First, you’ll need to know how much of a mortgage you can afford and will be approved for.
- Next find a property you want to buy and contact the sellers or the Realtor on the listing to ask questions.
- Decide on an offer you are willing to pay (this includes doing research on the property, neighbourhood, and the market).
- Have an attorney draft up all the legal paperwork.
- Present your offer to the sellers and negotiate. Once you reach an agreement, you’ll both sign the contract.
- Then you have to submit it to the mortgage lender and ensure the proper documents go to the city (for land title changes, etc).
This is by no means a detailed list of activities that need to take place to purchase a house. There are lots of unforeseen circumstances that can arise. There are endless amounts of paperwork and legal documents that need to be sorted and filed. Every property can present its own unique set of issues.
Purchasing a house without a Realtor is a big burden to take on, especially if your personal network doesn’t include real estate professionals. It’s important to have resources to go to for quick answers.