How the Real Estate Business Works
You're thinking of buying a house. Congratulations! Home ownership is a huge milestone. But before you start perusing listings, it's important to understand how the real estate business works. Here's a crash course.
The first thing you need to know is that there are two types of real estate agents: buyers' agents and sellers' agents. A buyers' agent represents the interests of the person looking to purchase a home, while a sellers' agent represents the interests of the person looking to sell a home.
Each of these people play an important role in getting a house sold, but they also want to get paid for their services. So, how does that work? Well, typically when a house is sold, the seller pays a commission to both the listing agent and the buyer's agent out of the proceeds from the sale. This commission is typically around 6%, but it can vary depending on the market conditions and other factors.
It's also important to understand that real estate agents typically work for brokerages. A brokerage is a firm made up of one or more real estate agents. The brokerage will usually take a cut of the agent's commission, so an agent working for a brokerage might only get 50% or 60% of the total commission from a home sale.
Now that you have a basic understanding of how the real estate business works, you're one step closer to finding your dream home! Just remember to keep this information in mind as you start your search; it'll help you navigate the process with confidence. Happy hunting!