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Who Pays the Buyer’s Agent Commission Fee?

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There has been much fuss around paying an agent’s fee for an agent ‘just opening the doors for you.’ Moving can be pretty expensive if not organized right, and with all the additional unexpected costs, everyone wants to pay the minimum. Because of that, we collected some helpful information about facts regarding the commission fees. Who pays who? How much? Is there a way around it? We covered it all.

California Los Angeles Roadway truck
Aerial view of Roadway truck in suburban streets and homes

What does the real estate agent do?

A real estate agent is a person who helps you find a house or an apartment you want. They use their knowledge and familiarity with the local units, allowing you to find your home faster and with more particular features of your liking. The difference between today’s agents and old-school agents is the internet. Today buyers find homes by themselves, and real estate agent arranges showings and negotiates offers.

On the seller’s side, a real estate agent helps with staging the home, taking professional photos, getting your home on multiple websites, and advertising. The more you pay them, the more marketing and professionalism resources there are.

So, who pays the buyer’s agent commission fee?

The buyer’s agent earns a buyer’s agent commission fee after the sale transaction is completed. The buyer pays both the buyer’s and seller’s agent’s fees.

It is an illusion that the sellers pay. Once sellers set up the price for the unit, they add up the agent’s commission fees to the price. It is usually around 4-6% of the property’s worth. Since the buyer pays in the end, the money for both the seller’s and buyer’s agent go from the buyer. That 4-6% is split up in two, so one agent earns around 2-3% of the property’s price.

Real estate agent
Professional Real Estate Agent Shows Bright New Apartment to a Young Couple.

What does the commission fee cover?

Since the buyers often find a unit by themselves and rarely an agent shows an off-market place, the question pops up. What does the commission fee cover, and is it more than an unspoken agreement for agents to earn their salaries?

The one agent’s commission fee for selling a $150,000 worth house is around $3,350. What does it cover?

Well, the buyer’s and sellers’ agents are doing different things. Still, every agent tries their best to do right on their client’s behalf.

For the buyer’s agent, it takes a lot of time to listen to wishes, find a proper house, arrange seeings, contact seller’s agents, highly professionally negotiate the prices, and be patient since looking for a place can take a couple of months and more. The agent should understand the basics of electricity, plumbing, and the history of buildings in the area. The agent should be informed and look out for potential problems- like if the place is turned toward the sun etc.

For the seller’s agent, the fee is also spent on advertising, listings, professional photos, and office space. The agent arranges showings, tries to represent the unit in the best light possible, and negotiates.

For Sale Real Estate
Home For Sale Real Estate Sign and Beautiful New House

Is paying a buyer’s agent mandatory?

Sellers frequently sign an exclusive right-to-sell contract, representing an agreement between the seller and the listing broker. This contract includes a clause requiring the seller to pay the fees by law.

Exceptions

There can be a situation when a buyer and their agent negotiate a rebate. In that case, the buyer’s agent rebates a portion of the commission to the buyer. This can happen when the property’s price is very high, you’re a long-time client working on many different sales, or your agent is working with the buyer.

A dual agency is a situation in which the agent represents both the seller and the buyer. Dual agency is illegal in some states since it can spark conflict. Both buyer’s and seller’s agents should do this on their client’s behalf. Since the same agent represents both, the question is could It be honest, and could it be good for both sides?

What if the owner lists a home? In this case, there is no seller’s agent commission to be covered, but the commission for the buyer’s agent still needs to be paid in the same way as when there are both agents.

You can use a discount real estate broker and save on commission rates and flat fees. Many companies provide this service, and some have in-house agents.

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