The Twin Cities’ tight housing market and rising home prices requires home buyers to be extra savvy. One way to stretch your home buying budget is to pay attention to all the hidden fees and commissions that can really jack up the cost of buying a home. And, now more than ever, it pays to remember one oft-overlooked fact: fees and commissions are negotiable.
Here is a summary of the seemingly nominal feels that, added together, can turn a bargain into a boondoggle.
Co-Op fees specify how the seller’s and buyer’s Realtors® will split their commissions. It might be included in your listing contract. Or, you may need to dig a little deeper and check the MLS data sheet. Making sure the split is more or less balanced incentivizes representatives of both sides to be diligent and fair. Some dual agencies avoid cooperative listings—or charge a fee when they do—since co-op exposure decreases their chances of representing the seller and buyer (and taking both sides of the commission).
Internet display fees attempt to charge extra for listing a seller’s home on websites such as Zillow. When selling your home, however, it is reasonable to insist that your Realtor® get the widest possible exposure for your home – for no additional cost.
Broker or administration fees are added to the commission and can soar as high as $795. Even though your Realtor® may give you the impression that these fees are “standard” or “boilerplate,” they are negotiable, sometimes all the way down to zero.
Broker commissions are included in the pre-printed contract your Realtor® hands you, so they may seem set in stone. With commissions sometimes as high as 8, 9 or even 10 percent, however, it’s important to keep in mind that those numbers may be inflated. Your Realtor® may have set them high, either to make room for a reduction, or to make a reduction seem like a “discount.”
Now that you’re aware of hidden fees, do a little due diligence to determine what is a fair rate – then stick to it. And, keep in mind that other practices, such as business affiliations and arbitration, also can wind up needlessly costing you money.
You know why lots of second-time home buyers choose an Exclusive Buyers Agent over a traditional real estate agency? It's because they've already been through the process—and realize there's a better way to buy a house.