What is Buyer Agency Compensation?

When you’re buying a home, one of the most important pieces of the puzzle is working with a real estate agent to guide you through the process. But how do these agents get paid, and who is responsible for covering their fees? This is where buyer agency compensation comes in. Traditionally, sellers have covered these costs, but recent changes following the NAR settlement have shifted the dynamics, making the process more transparent and completely negotiable between buyers and sellers.The role of the buyer’s agentThe role of the buyer’s agent is to represent and advocate for the buyer throughout the home-buying process. A buyer’s agent helps clients find suitable properties, arranges showings, and provides advice on market conditions and pricing. They guide the buyer through negotiations, work with the buyer to help ensure the buyer’s interests are protected when making offers and navigating counteroffers. The buyer’s agent also assists with critical steps such as arranging inspections, reviewing contracts, and managing the closing process. Ultimately, their goal is to help the buyer secure the best deal possible while making the experience as smooth as possible.Defining buyer agency compensationBuyer agency compensation refers to the commission a buyer’s agent earns for representing the buyer during a real estate transaction. This payment is tied to the services provided by the agent, such as finding properties, negotiating offers, and guiding the buyer through the closing process. Following the NAR settlement, buyers must now agree to their agent’s fee before touring homes, making it a more transparent and negotiable aspect of the transaction.How buyer’s agent compensation works at Redfin Our fees when serving buyers vary by market, but are competitive because we know they could make the difference in your winning or losing an offer. We also offer additional savings for buyers who make a commitment to hire us after the first tour. With our Sign & Save program, if you commit to hiring your Redfin agent before the second tour, we’ll reduce our fee by 0.25%. We earn customers’ business by providing the best service and value.Who pays the buyer’s agent commission?While sellers have historically tended to cover the buyer’s agency commission as part of the transaction, these fees have always been negotiable—and still are. With recent changes in the real estate industry, sellers are now more aware that they can negotiate whether or not to pay the buyer’s agent fee. Buyers may be asked to contribute to or cover the commission, depending on the terms of the deal. Though it’s still common for buyers to request that sellers handle this cost, it’s no longer as automatic, making it important for both parties to discuss this fee during negotiations. Learn more about who pays the real estate commission. Factors that influence how buyer agency compensation is handled Several factors can influence how buyer agency compensation is handled in a real estate transaction. One of the biggest factors is the current market conditions. In a competitive seller’s market, buyers may be more willing to cover their agent’s commission to make their offer more attractive. On the other hand, in a buyer’s market, sellers may offer to pay the fee as a way to incentivize buyers. Local regulations and practices also play a significant role. In some states or regions, it’s more common for sellers to cover the buyer’s agent fees, while in others, it may be more flexible.Additionally, the size and price of the property can impact negotiations—higher-end homes might have more room for fee negotiations than lower-priced properties. Finally, the experience and strategy of the agents involved can influence how commissions are handled. Skilled agents often have better insights into what terms are negotiable and how to structure a deal in a way that benefits their clients. Understanding these factors and working with a knowledgeable agent who is familiar with local market trends and regulations is crucial for navigating buyer agency compensation.A final note on buyer’s agency compensation Buyer agency compensation plays a crucial role in real estate transactions. Factors like market conditions and local regulations can influence who pays the fee, making it important for both buyers and sellers to discuss this during negotiations. Working with a knowledgeable agent ensures you navigate this process smoothly and get the best deal possible.The post What is Buyer Agency Compensation? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

How to Screen Tenants: Step-by-Step Guide to Screening Renters

When listing your home for rent, there’s plenty to do like creating an application, finding tenants, and signing a lease agreement. One thing you’ll need to learn about is how to screen tenants during the application process. In this Redfin article, we’ll give you the step-by-step guide to screening renters, from setting application requirements to pre-screening tenants and verifying their information. Whether you’re renting your home in Austin or renting your condo in Chicago, read on to find out how to screen tenants. 1. Understand Fair Housing lawsBefore screening any potential tenants, you’ll need to understand Fair Housing laws. While you can choose the renters that fit your requirements, you still need to follow local, state, and federal laws. Under the Fair Housing Act, you can’t reject a tenant based on race, color, national origin, religion, sex, familial status, or disability. Some states have additional protected classes and laws preventing housing discrimination. Familiarize yourself with local and state laws to make sure you’re not inadvertently rejecting a tenant based on protected classes.2. Set application requirementsBy setting application requirements, you can better objectively determine the best tenant for your property. Here are some things to consider when setting up your qualifications.IncomeIt’s common to set income requirements for your property to ensure that tenants are capable of paying rent on time. Many landlords use a rent-to-income ratio to determine income requirements for their applicants. You want to make sure that any prospective tenants are going to be able to cover rent costs without stretching their budget too much. Choosing an income requirement that’s disproportionate to the area you’re renting in may cause your property to stay vacant longer than you’d like. Credit history and scoreMany landlords require a higher credit score, often above 670. This means you’re often looking for tenants who have a credit score in the good range or better. Higher credit scores can be indicative of a more reliable tenant who pays bills on time. However, someone with a lower credit score isn’t necessarily unqualified to rent your home. It’s possible that they’ve recently begun building their credit or have unpaid debts, like student loans. You can read their credit history, ask questions, or ask for references if you want to have a lower credit score requirement for your property. Potential tenants may also have a good rental history report that supports their ability to make on-time payments – even if they have a lower credit score. Previous evictionsYou may want to require applicants to disclose any prior evictions. If an eviction appears during your screening process, consider asking for additional details and requesting permission to contact the previous landlord or property management to better understand the circumstances.Criminal historySet clear guidelines on how criminal history will be evaluated. While certain convictions, like a DUI, may not be valid grounds for denial, more serious offenses—such as arson—could be. It’s important to ensure that any criteria for denial are based on safety concerns and legal standards. Consult with an attorney to clarify what qualifies as a “dangerous criminal conviction” under the law.3. Pre-screen rentersWhile pre-screening renters may sound like you’re interviewing them before they submit the application, that’s not the case. The way you pre-screen tenants is through the rental listing itself. Some information you might include:Monthly rentSecurity depositApplication feeBackground checkCredit report fee (if applicable)References from previous landlordsSmoking policiesPet policies and pet rentAny additional rulesListing out information allows tenants to decide whether they want to apply to your rental. For example, if a tenant has multiple pets, and you don’t allow pets in your rental, they likely won’t apply, saving you both time and money. 4. Create an applicationHaving the same application for all applicants is a great way to keep the tenant screening process fair and objective. You’ll need to request information like their current address, employment history, current and previous landlords, references, gross and monthly income, monthly debt payments, and any information about pets. To streamline this, you can use a template or online form builder to ensure consistency. All this information can help identify qualified tenants and help you follow Fair Housing laws. 5. Run a credit checkRunning a credit check can be more than just seeing an applicant’s credit score. It can also show any bankruptcies (up to 7-10 years later, depending on the type of bankruptcy), late or missed payments, and other financial problems. You can also use a credit check to verify their name, past addresses, current and previous employers, and date of birth. For more information, you can ask tenants to submit a credit reference. Depending on what the credit report details, you can consider asking the tenant to have a cosigner or a higher deposit amount if you have concerns about their financial situation. 6. Conduct a background checkAnother important part of the screening process is to conduct a background check on potential tenants. Running a background check will identify any criminal records and public records, such as court cases. If an applicant’s background check shows violent criminal records, you may be able to legally reject their application. However, certain types of criminal behavior are not legal reasons to turn down an applicant. You’ll need to evaluate each tenant on a case-by-case basis to ensure you’re following any laws – and making the right decisions. 7. Verify other informationThere are other types of information that you’ll need to verify. This includes W-2 forms, recent pay stubs, and speaking with their employer. You can also reach out to their current or previous landlord to learn more about their payment history. Or you can contact any personal references they’ve included on the application. 8. Meet potential tenants and ask questionsIt’s not a requirement to meet potential tenants, but if you would like to learn more about them, you can. However, there are plenty of questions that you can’t ask them, as it can violate Fair Housing laws. Here are some example questions to ask:What is your intended move-in date?Why are you moving? How long do you intend to stay? (ex. 6 months, 12-months)How many people will be living here?Do you have any pets?Do you smoke?Do you have any prior evictions?How many parking spaces are you looking to have?Meeting applicants in person or speaking with them on the phone can also give them the opportunity to ask you about the home’s features or any additional questions. 9. Decide on tenantsOnce you’ve collected all the information on your prospective tenants, you’ll need to evaluate each one objectively. It can sound like a difficult task, but there are some tips that can make it easier.Follow the requirements you’ve listed above – these can highlight which tenants fit your criteria. Don’t judge applicants based on subjective criteria, which in most cases is illegal. Consider leasing to the first tenants that meet your criteria. For example, if you have nine potential tenants who all meet the criteria, consider choosing the first person who applied, “first person, first served.”At the end of the day, creating clear guidelines for screening tenants can help you keep the process objective. Finding the right tenant takes time, but following a streamlined process can make the screening potential tenants easier. The post How to Screen Tenants: Step-by-Step Guide to Screening Renters appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

Indiana Real Estate Commissions: What You Can Expect in 2024

Real estate commissions play a pivotal role in determining the overall costs of buying or selling a home in Indiana. New changes introduced in 2024 have brought more transparency to the process, making it easier for both buyers and sellers to understand fees and negotiate more confidently. These updates are aimed at making real estate transactions clearer for everyone involved.Whether you’re a first-time homebuyer or a seasoned seller, this guide will cover the essential details about real estate commissions in Indiana.Current state of the Indiana housing marketBefore diving into commission specifics, it’s helpful to look at the current state of Indiana’s housing market:Median Home Sale Price$267,100Housing Supply24,023 (+15.8% YoY)Homes Sold Above List Price22.3% (-5.8 pts YoY)Understanding real estate commissions in IndianaWhat are real estate commissions?Real estate commissions refer to the payment made to real estate agents upon the successful completion of a home sale. Usually, these fees are calculated as a percentage of the final sale price and are paid at the time of closing, compensating agents for their efforts throughout the transaction process.Who pays the commission?In the past, sellers typically covered both their agent’s fee and the buyer’s agent’s fee. However, as of August 17, 2024, buyers are now required to sign a document specifying their agent’s fee before they start touring homes.While buyers can still ask the seller to cover their agent’s commission, this new update makes the buyer’s agent fee more flexible and open for negotiation. Sellers are no longer automatically expected to cover these costs.Average real estate commission rates in IndianaIn Indiana, real estate commission rates can vary significantly depending on the details of the transaction and the agreements made between the buyer, seller, and their agents. While there are standard expectations for commission rates, these fees are fully negotiable, giving both parties the opportunity to find a commission structure that aligns with their preferences.Key factors such as the property’s location, the current market, and the level of service provided by the agent can all impact the final commission. This flexibility allows buyers and sellers to adjust fees based on their specific needs and financial goals. Below is an example of typical commission rates based on median home prices in some of Indiana’s major cities.CityMedian Home Sale Price1.5% Real Estate Commission3% Real Estate Commission5% Real Estate CommissionIndianapolis$250,000$3,750$7,500$12,500Fort Wayne$220,000$3,300$6,600$11,000Evansville$155,000$2,325$4,650$7,750At Redfin, we’re dedicated to delivering exceptional value to consumers. Sellers can benefit from a listing fee as low as 1%*. For buyers, our fees vary by location but are designed to remain competitive, helping your offer stand out and increasing your chances of success in the homebuying process.Can you negotiate real estate commissions in Indiana? Definitely! There are no laws in the U.S. that set commission rates, meaning agents are often open to negotiating lower fees based on the specifics of the transaction, the services needed, and the client relationship.When negotiating, it’s essential to consider the services being offered by the agent, such as their marketing plan and local expertise. These factors can impact the fee structure. Additionally, homes in high-demand areas may offer more room for negotiating a lower commission rate. In cases of dual agency, where one agent represents both buyer and seller, it may also be possible to reduce the overall commission costs.Tips for a successful negotiationInterview multiple agents to compare their fees and services.Propose performance-based incentives to motivate your agent to secure a faster sale or higher sale price.Use your property’s appeal, especially if it’s in a desirable location, to encourage agents to adjust their commission.Indiana real estate commission FAQsWhat are the changes to real estate commission? Two key changes took effect: buyers must agree to their agent’s commission before touring homes, and in many markets, buyer agent commissions are no longer visible on MLS listings. Learn more about the real estate commission changes here. How do the changes impact buyers in Indiana? Buyers now need to sign an agreement that specifies their agent’s fee before starting home tours. However, they can still negotiate with sellers during the offer process to cover the agent’s fee.How do the changes impact sellers in Indiana? Sellers can work with their listing agent to determine if they’ll cover any of the buyer’s agent commission. Sellers should be prepared to negotiate these costs with potential buyers.How do you find a real estate agent in Indiana? When you’re ready to buy or sell in Indiana, connecting with a Redfin agent will give you expert guidance through the entire process.How can you avoid fees? One way to avoid commission fees is to sell your home as a For Sale By Owner (FSBO). However, handling all the marketing, showings, and legal paperwork yourself can be challenging without the help of a professional. *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.The post Indiana Real Estate Commissions: What You Can Expect in 2024 appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

9 Charming Small Towns in Colorado You’ll Want to Call Home

If you’re thinking about moving to Colorado, bustling cities like Denver or Colorado Springs might come to mind. However, this state has much more to offer. From quaint downtowns to festivals that bring the community together, Colorado’s small towns are perfect for anyone looking to experience what life is like in its quieter corners. In this Redfin article, we’ll discuss 9 charming small towns in Colorado, each with their own unique character and plenty of reasons to call home.1. Clifton, COMedian sale price: $299,500Homes for sale in Clifton | Apartments for rent in CliftonClifton is located in the heart of the Grand Valley. Known for its proximity to Palisade’s famous vineyards and peach orchards, Clifton is a popular destination for wine and fruit lovers who enjoy sampling local wines and fresh produce. The nearby Colorado River provides plenty of opportunities for kayaking, fishing, and leisurely walks along the riverbank. On weekends, locals head to the Grand Mesa, the largest flat-topped mountain in the world, for hiking, camping, and scenic drives.2. Monument, COMedian sale price: $651,000Homes for sale in Monument | Apartments for rent in MonumentSituated at the foot of the Rocky Mountains, Monument is a town with stunning mountain views. The town’s historic downtown has a mix of local shops, restaurants, and art galleries, making it a favorite spot for a leisurely afternoon. Each summer, the town comes together for the annual Monument Art Hop. This is an exciting event where residents explore local art and enjoy live music and food vendors. Outdoor enthusiasts love Monument’s close proximity to Pike National Forest, where hiking and biking trails provide breathtaking views of the mountains.3. Fountain, COMedian sale price: $410,000Homes for sale in Fountain | Apartments for rent in FountainFountain was once called the “America’s Millennium City” because it had a population makeup that closely resembled the rest of the United States in the late 1990’s. The town is just a short drive from Colorado Springs, yet maintains a small-town feel. Local favorites like Metcalfe Park offer residents a great space for picnics and outdoor activities. Additionally, Fountain’s military roots run deep, with nearby Fort Carson serving as a key base for the U.S. Army.4. Fort Morgan, COMedian sale price: $285,000Homes for sale in Fort Morgan | Apartments for rent in Fort MorganFort Morgan, located on Colorado’s eastern plains, is a town with a fascinating blend of history, agriculture, and culture. The Fort Morgan Museum showcases the area’s pioneer heritage, while the town’s connection to jazz great Glenn Miller, who grew up here, is celebrated with an annual Glenn Miller Festival. Agriculture remains a vital part of the local economy. Visitors can experience this at the Morgan County Fair, where livestock shows, rodeos, and fair food bring the community together. Riverside Park, located along the South Platte River, is a popular spot for family gatherings, fishing, and birdwatching.5. Sterling, COMedian sale price: $250,000Homes for sale in Sterling | Apartments for rent in SterlingKnown for its agricultural roots, Sterling celebrates its heritage each year with the Logan County Fair. During the fair, you’ll find locals enjoying rodeos, livestock shows, and carnival rides. History buffs can explore the Overland Trail Museum, which showcases the pioneer history of the region, complete with a collection of historic buildings and exhibits. Additionally, Sterling’s proximity to the South Platte River makes it a favorite for outdoor activities like fishing, boating, and hiking along the riverbanks.6. Steamboat Springs, COMedian sale price: $1,165,000Homes for sale in Steamboat Springs | Apartments for rent in Steamboat SpringsSteamboat Springs, located in the Yampa Valley, is a great destination for both winter and summer adventures. Known as “Ski Town, U.S.A.,” Steamboat is home to the famous Steamboat Ski Resort, where powdery slopes attract skiers and snowboarders from around the globe. In the summer, residents enjoy tubing down the Yampa River or hiking the scenic trails around Fish Creek Falls. The town’s Old West charm comes alive each summer during the Steamboat Springs Pro Rodeo, a celebration of its cowboy heritage. Whether hitting the slopes or enjoying the local hot springs, Steamboat Springs offers year-round outdoor activities paired with a laid-back mountain town vibe.7. Fruita, COMedian sale price: $437,000Homes for sale in Fruita | Apartments for rent in FruitaFruita has made a name for itself as a mountain biking mecca. The town attracts riders from all over the world to its famous trails like 18 Road and Kokopelli’s Loop. Located near the Colorado National Monument, Fruita also has beautiful red rock landscapes perfect for hiking and scenic drives. The town’s laid-back, outdoorsy vibe is on full display during the annual Fruita Fat Tire Festival, a multi-day celebration of mountain biking, live music, and local brews. Furthermore, locals and visitors can spend their days exploring the Dinosaur Journey Museum, which highlights the area’s prehistoric past.8. Edwards, COMedian sale price: $2,455,000Homes for sale in Edwards | Apartments for rent in EdwardsEdwards, located in the heart of the Vail Valley, offers a quieter, more relaxed alternative to its bustling neighbors like Vail and Beaver Creek. This charming town is a favorite for outdoor enthusiasts who enjoy hiking, mountain biking, and fly-fishing along the Eagle River. Edwards’ Riverwalk shopping area is the town’s social hub, featuring boutique shops, restaurants, and outdoor concerts during the summer. The town’s proximity to world-class ski resorts makes it a great base for winter sports without the crowded resort scene.9. Rifle, COMedian sale price: $528,000Homes for sale in Rifle | Apartments for rent in RifleRifle is a small town with big outdoor adventures, especially for hunters and nature enthusiasts. Situated along the Colorado River, Rifle is famous for its rugged landscapes. Rifle Falls State Park and Rifle Gap Reservoir are favorites for their opportunities for camping, hiking, fishing, and wildlife watching. The Rifle Mountain Park is a hidden gem for rock climbers, known for its challenging limestone routes. Each year, Rifle hosts the Garfield County Fair and Rodeo, where the community comes together for rodeo events, live music, and traditional fair fun. Methodology: The median home sale price and average monthly rental data is from the Redfin Data Center.The post 9 Charming Small Towns in Colorado You’ll Want to Call Home appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.