At Homebuyers Law, we charge a flat fee. The obvious benefit to you is that you are only paying us a flat fee rather than the 2.5-3% commission that other agents are charging you. However, there are other benefits of paying a flat fee.
The Ability to Negotiate a Lower Seller Concession
Many buyer agents will sell you on the pitch that, “we will get the seller to provide a concession that will cover the cost of my 3% commission.” They will argue that this negates the charge since the seller concession will cover their fee. However, when you are only paying a flat fee, all you need is for the seller to provide a small credit to cover the flat fee. That makes your offer much more attractive to the seller. Why? Well, here’s the simple math.
Scenario 1: 3% Commission:
- Buyer offer: $700,000
- Buyer asks for 3% seller concession ($21,000)
- Seller sales price net is $679,000 ($700,000 – $21,000)
Scenario 2: $4,750 Flat Fee:
- Buyer offer: $700,000
- Buyer asks for $4,750 seller concession.
- Seller sales price net is $695,250 ($700,000 – $4,750)
Note that in both above scenarios, you, the buyer, are paying the exact same amount. In both scenarios, the sales price is $700,000, but in Scenario 2, the seller nets $16,250 more! Now, if you were the seller, which deal would you take?
The Ability to Negotiate a Seller Concession that Helps the Buyer
But what if, somehow, despite the NAR settlement, the seller somehow conveys that they are offering a 3% seller concession? A buyer’s agent will likely tell the buyer, “that 3% seller concession covers my commission, so see, there’s no cost to you.” But is that true? Let’s do some more math!
Scenario 1: 3% Commission and Seller offers 3% concession
- Buyer offer: $700,000
- Seller is providing 3% seller concession ($21,000)
- Seller sales price net is $679,000 ($700,000 – $21,000)
- Buyer sales price net is $700,000
- Entire 3% seller concession covers buyer agent fee
Scenario 2: $4,750 Flat Fee and Seller offers 3% concession
- Buyer offer: $710,000
- Seller is providing 3% seller concession ($21,300)
- Seller sales price net is $688,700 ($710,000 – $21,300)
- Buyer sales price net is $693,450 ($710,000 – $16,550)
- $4,750 of seller concession covers Flat Fee, remaining credit goes back to buyer
Notice once again that the better deal for the seller is Scenario 2. However, in this scenario, not only does the seller benefit, but the buyer benefits as well. Since in Scenario 2, only $4,750 of the 3% seller concession pays the Flat Fee, the remaining amount benefits the buyer. Because of this, the buyer could increase the sales price offer, which in turn benefits the seller AND still benefits the buyer. Scenario 2 is better for the buyer AND the seller.
Beware
A trick that the buyer agent might employ to make sure that the seller is netting a higher amount is to increase the sales price. Sure, this will make your offer more attractive to a seller. BUT it will increase your buyer cost significantly if the agent keeps the entire seller concession.
At Homebuyers Law, we only charge what we agreed on at the beginning. No adjustments for higher seller concessions. You know exactly what you are paying at the start. And, as shown by the prior examples, your offer starts off in a stronger position.