Real Estate Agent Commission – This is a true buyers market, virtually everything is in the buyers favor at this time. The standard realtor commission used to be 6%, this was an industry standard that held true for many years but the market has changed and it’s entirely up to you to negotiate the best deal possible for yourself. A lot of people are uncomfortable with the whole negotiating process but it is not considered rude or inconsiderate but rather just part of the normal procedure. If you have hired a professional realtor, they will not be offended if you ask if they are willing to accept a lower commission. In this market, real estate agents are competing heavily and if you are a qualified buyer, I almost guarantee you’ll be able to find a realtor who will accept a lower commission.
House Price – This is an obvious one but it needs to be touched on. In this market, cash is king and you can scoop up some real estate deals if you bide your time and do your research. Before making an offer on a house find out how long the house has been on the market, what are comparables going for, what did the house sell for originally, and has the price been recently reduced. The longer the house has been on the market, the more desperate the seller is to sell. But, be cautious and also consider that the reason the house hasn’t sold is because the owner has set an unrealistic sale price. A realtor will be able to advise you on these points. I heard it said once that when you make an offer on a house, if your not a little bit embarrassed that your offer is too low then you offered too much. I think this is true. Go low; it’s not your problem if the home owner is insulted, you’re trying to get the best deal possible for you and your family.
Loan Origination Fees – Loan officers who work in banks and other lending institutions like credit unions are usually paid by commission. In some instances they may be paid only straight commission with no salary and the loan origination fees you pay are their salary. The loan origination fees are typically 1% of the sale price and the loan officers gets a percentage of that, about 40% – 70% with the bank keeping the rest. In some cases, they work on a tiered scale where if they close a certain amount of loans they would go up to a higher level and then get a larger percentage of the loan origination fee. In cases like this, if the loan officer is short on loans, it is in their best interest to work with you so that they can get up to the higher level for the month or quarter and then they would make money anyway.
Home Appraisal – When buying an older home, a home appraisal or inspection is often required and should definitely be requested by you the home buyer. This is usually a smaller fee but it may be negotiable.
