House Market April 6, 2022

Who Pays What

One of the most frequently pondered topics in real estate is that of agent commissions. Who pays realtor fees? Why are these fees charged? Are they negotiable? Admittedly, the details of agent fees can be a bit murky. Let’s take a moment to clear things up!

How real estate agents get paid, and who really pays them

The agents who represent the seller and buyer split a commission fee (typically 5-6% of the purchase price of the home at the close of escrow. The concept of who pays the commission can be a tricky one to explain, which is why it’s no surprise some agents attempt to simplify things by telling the buyer that the seller covers the fees. That, however, isn’t entirely true.

While the payment is technically disbursed by the seller, the funds come from the money the buyer pays to the seller. It’s actually not uncommon for sellers to account for paying these commissions by factoring them into the initial listing price. Buyers essentially foot the bill for these fees when it comes time to close.

What do these fees cover?

While many of today’s buyers often prefer t o house hunt on their own, others decide to work with an agent to find a home. For those who choose to work with a traditional buying agent, they’ll find that their agents spend most of their time pulling home listings, driving to tour homes and doing pricing analysis to help them make strong offers.

Once the buyer’s offer is accepted and enters escrow, the agent will spend their time helping coordinate inspections and appraisals, negotiating repairs costs, handling all of the closing paperwork and some light accounting (the agent is responsible for maintaining the financial account used to pay inspectors and appraisers).

Are agent fees negotiable?

You might be surprised to learn that everything is negotiable. Some transactions lend themselves to negotiating more than others. Dual agency sales, or sales in which one agent represents both the seller and buyer is one such transaction. Additionally, if you’re selling multiple properties at one time, you might be able to negotiate a reduction in the agent’s fee in exchange for the right to exclusively list the properties.