Real Estate Commission
If you’re thinking of buying or selling a home, you’ll want to know who pays the real estate commission. Real estate commission is paid by the seller.
When a home is listed for sale, the listing agreement between the seller and his agent outlines who pays the real estate commission.
All members of the Board of Realtors agree that commissions will be split between the listing and selling companies. The closing attorney collects the commission at closing. These funds are distributed based on the agreement between the listing broker and the seller.
Homebuyers have no obligation to pay the real estate commission when purchasing a home that is listed in the Multiple Listing Service. Some buyers believe they will get a better deal by using the listing agent to buy a home. Since the commission is already negotiated between the seller and the listing agent, this may not be in your best interest. Having a buyers agent gives you representation with your own agent. The listing agent represents the seller.
Another point of confusion is related to what’s included in the closing costs. The real estate commission is a cost to the seller and is not included in the buyers closing costs. Those costs are primarily related to the cost of the buyers financing.
For Sale By Owner
If you are interested in a For Sale By Owner property, you can still have a buyers agent. Most sellers are happy to offer a commission to buyers agents. This gives agents more incentive to show those homes. It is important to have the agent contact the owner for showing information. At that time, the commission arrangement will be discussed prior to viewing the home.
Many online home value sources may not be aware of all details of the home for sale. Working with a real estate agent or at minimum having an independent appraisal can be money well spent in determining the most accurate value of a property.