There are three types of possible commissions during a real estate transaction:
The seller’s real estate agent commission
The buyer’s real estate agent commission
The mortgage broker or lenders commission
All of these can change from deal to deal.
Real estate agents
The seller’s real estate agent is the “listing broker”. If another real estate agent brings a buyer to the table, then typically the commission is split between the buyer’s and seller’s agents.
These commissions are usually around 6% or lower, and are negotiable.
Mortgage broker (or lender)
The mortgage broker, if you use one, essentially charges fees two different ways. One may be “flat fees” such as processing fees or admin fees. The other types of fees are variable such as the “points” you may pay. A “point” is 1% of the loan size. If the loan size is $400,000 and you are charged two points, you are being charged $8,000 (2% of the $400,000 loan).
A lender will either charge you upfront the way a mortgage broker does, or offer you a higher interest rate to increase their profits.
A lender is not necessarily cheaper than a mortgage broker. If they always were, no one would be in the mortgage brokering business.
For more information visit www.archerpacific.com
Loan Library.
The author is the owner of Archer Pacific, a mortgage company. The firm's website, http://www.archerpacific.com, has extensive resources and tips on many mortgage topics.
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