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FIRE: How to save 3% on your first home purchase

Your strategy to avoid paying your real estate agent's fee

Why on earth are we still giving away 3% to real estate agents when we purchase a home?

You found the home on Zillow.

Could easily have viewed it without the aid of someone who apparently thinks we could not discern if the room with the fridge was, in fact, the kitchen.

Completed the comparables analysis to determine an appropriate offer.

You handled all negotiations with the seller.

And obtained the loan from the bank.

The only real missing piece here is drafting the legal documentation required.

That then brings us to the contention of this piece - we should cut out the middle man (real estate agent) and just go right to the individual who can prepare the last piece of the puzzle for us.

For the skeptics relying on the "but the seller pays the closing costs not me - so I don't care". Obviously, the seller is simply going to pass these costs on to you in the form of a higher price for the house.

This is accomplished by using a real estate lawyer OR discount real estate broker (yes, they exist).

A real estate lawyer "can do everything from looking at the seller's deed and title chain to being present as the closing attorney to ensure things go smoothly. Real estate attorneys can also dispense great advice, including problems with a particular property and help finding partners to work with, like a lender, title company, appraiser, and more."


So really everything except give you a tour of the house.

Real estate lawyers can either set pricing at a flat fee (very common) or can establish an hourly billing rate (with a projected total hours - so very similar to a flat but with a small risk that more hours than expected are required).

Estimated cost averages (available here) were about $500 to $2,000 (so based on a 3% realtor comparable, you will save money on all sales over $66,000).

A discount real estate broker provide partial services at a discoutned rate which include "listing your home on the MLS, giving you a sign to use, and maybe a few other things such as a half hour of customer support.


So really everything except telling you what price to set it at, answering the phones (client inquiries), and facilitating negotiations.

Discount real estate brokers can charge anywhere from a few hundred dollars to 2% (which would still result in you saving 1% compared with a full-service broker).

Either option can save you almost the entire 3% commission you would have normally handed over to someone who opened a door one time.

Yes it might take a minute to find the right lawyer or discount broker, but on a $200,000 home purchase, this would be savings of up to $6,000.

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