Derek Morgan
Derek Morgan
Real Estate planning with professional agent
Derek Morgan
Derek Morgan

    Who Pays the Real Estate Agent Commission?

    When it comes to buying or selling a home, having a top-rated, knowledgeable real estate agent by your side can make all the difference in the world. One question that often comes up is “Who exactly pays the real estate agent commission?” Let’s take a closer look at the standard practices, how much you can expect to pay, and whether or not you can negotiate who pays the real estate agent.

    Standard Practice

    It’s custom that the seller pays the real estate commission for both the listing agent and the buyer's agent. This may sound like a raw deal for sellers, but keep in mind that most sellers will "wrap" the commission into the price of the home. In a sense, the buyer is indirectly paying for the commission.

    How much is the fee?

    The total commission is commonly a fee paid at closing by the home seller, unless some other arrangement has been made, and is usually a percentage of the home's sales price. For example, if the commission is 6% on a $200,000 house, then the buyer’s agent and the seller's agent would split $12,000. However, keep in mind that commission rates can vary from state to state, and even within individual brokerages. It's always a good idea to review the details of the agent's fee in the agreement you sign when hiring an agent, and to ask questions if there's anything you don't understand.

    Additional Costs

    It's also important to note that additional costs, such as photography, the cost of listing the property, and the cost of any printed materials or signs are generally included in the fee. However, if you need to do major staging or repair work, those costs will come out-of-pocket.

    Negotiating the Costs

    While the seller can negotiate the terms of the listing agreement with the brokerage or agent, buyers can also offer to pay some or all of the agent's fees as a way to stand out in a tough housing market or bidding war. Even though buyers normally pay most of the closing costs, these costs are up for negotiation. A good agent will help you get the best deal possible.

    Dual Agency

    A dual agency is where one agent represents both the buyer and the seller. Also known as a transaction broker, the dual agent gets both commissions on the sale. However, dual agency isn't typically practiced among real estate agents. Having the same person represent both parties in a home or property sale can create a conflict of interest, and therefore dual agency is illegal in some states. 

    Conclusion

    Remember: a skilled real estate agent can significantly impact the course and outcome of buying or selling a property. Someone who represents your best interest can be well worth the commission. The whole procedure can be stressful or tough to do on your own. An agent can alleviate some of the stress by making sure the deal you're getting is worth what you're paying. Whether you're buying or selling, it's essential to understand the real estate agent commission and fees, and to have a good agent by your side to guide you through the course before closing. 

    However, it is entirely possible to go about your real estate proceedings on your own. If you want to avoid insanely high or (oftentimes) unnecessary fees, or simply want to try an alternative method, check out our article All You Need To Know About Real Estate Agent Fees (And How To Reduce Them).

    We'd love to hear your thoughts about this article and our blog. Let us know how we did by completing the Unreal Estate Blog Feedback Survey.

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