For both buyers and sellers, the help of a knowledgeable broker/agent is valuable, but who pays the real estate agent for their services? If you’re about to start your home-buying journey, you’re likely thinking about hiring a real estate agent. Buyers and sellers are responsible for paying for different fees, so it’s important to know best practices for a typical home sale.
Here’s what you need to know about real estate agent commission and how much cash you can expect to contribute.
Who pays the real estate agent?
Standard practice is; the seller pays the real estate commission. Commission is then split amongst both the listing agent and the buyer’s agent. However, while sellers pay the fees, it is paid at closing from the funds seller receives from buyer. In that sense, you could say the buyer pays the fees. It really depends on how you look at the situation.
How much are real estate agent fees?
A common commission for real estate agents is 6% of the purchase price of the property. The fee is paid at closing by the seller, unless some other arrangement has been made.
All of the details about a real estate agent’s fee should be in the listing agreement you sign when you hire an agent—don’t be afraid to ask questions if there’s anything you don’t understand.
Generally, things like photography, the cost of listing the property, the cost of any printed materials or signs, and the cost of all the marketing are covered by the listing agent. If you have to do major staging or repair work, those costs will come out of your pocket.
Can you negotiate real estate agent fees?
A seller can negotiate the terms of the listing agreement—which contains the real estate agent fees—with the brokerage or agent.
If a buyer is in a tough seller’s market or bidding war, offering to pay some or all of the real estate agent’s fees can be a way to stand out from other offers. In fact, even though the buyer usually pays most of the closing costs, they are up for negotiation, too. That’s one of the many things a good agent will do for a buyer in this situation— by making sure you get the sweetest deal possible.
