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The age-old question in real estate: Does it make more sense to rent, or should you be looking to buy your next property? If you have been renting for years, you may hear that you are missing out on a guaranteed investment and wasting money on rental fees. In reality, everyone’s situation is different and the decision to rent or buy depends on your personal circumstances. Regardless of which option you choose, you will likely incur a “broker fee” on your mortgage or new rental. Check out some more information below so you know what you are paying for — and can be sure you get it.

What It Is

A broker acts as intermediary between buyers and sellers (or tenants and landlords). This agent charges a fee for services like negotiations, sales, purchases, communication with lenders, delivery and advice on this transaction. In regards to real estate, this is the person that can help you find your rental or establish your mortgage if you are looking to buy.

How It’s Calculated

Broker fees are usually based on a percentage of the transaction or a flat fee determined by the broker and his or her firm. They can also be a combination of the two. Broker fees are often negotiable. Even if nothing about this is mentioned when you are quoted the broker fee, it’s generally a good idea to inquire about paying a lower amount. For rentals, the broker fee is often a month’s rent.

How to Handle It

While not always absolutely necessary, brokers can save you time and aggravation. They should have the expertise to advise you through the complicated process of home rental or purchase. In some cities, getting a rental property is pretty doable without one, while in others (like New York City) it can be hard to find a home without a broker. You can use online tools to help you work without them or even get advice on how to find the right broker for you. It’s a good idea to shop around different agencies or individuals before you commit, so you know you are getting the right representative you need in addition to the right home and price.

Now that you are equipped with a little more information on the fees you will be facing with your next property, you can figure exactly how much rental or house you can afford. A major factor in home affordability is your credit, so check your scores ahead of time (you can get two of your credit scores for free on Credit.com) to see where you stand before you apply.

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