In the market for a home and wondering how you’ll pay your realtor? Below, we’ll cover the ins and outs of the buyer’s agent fee, including who pays the buyer’s real estate agent.
What is the Buyer’s Agent Fee?
Buyer’s agents do a lot, from showing you homes, preparing the contracts, negotiating, and helping with a smooth closing. And, of course, they don’t do it for free. Buyer’s agents receive compensation, called a commission or fee, when they complete a real estate transaction.
Buyer’s agents typically receive half of the total commission from the sale of a home. The commission depends on what percentage the seller agrees to pay their realtor to sell their home. It’s often 5% to 6% percent of the home’s sale price, meaning a buyer’s agent receives 2.5% to 3%.
Who Pays the Buyer’s Real Estate Agent?
In most cases, the seller pays the buyer’s real estate agent. A seller lists a home for sale with an agent at a certain percentage sales commission. When the seller lists the home for sale on the MLS, it displays the commission split for the listing agent and the buyer’s agent. It’s usually a 50/50 split. Most commonly, the sales commission is 6%, so the listing and buyer’s agent each receive 3% of the purchase price of the home.
When Does The Buyer’s Agent Get Paid?
At closing, the seller then pays the agreed contract fee to the listing agent’s brokerage. The listing agent’s brokerage pays half to its agent and half to the buyer’s agent’s brokerage, or the closing agent will be instructed to split the commission on the settlement statement.
Depending on the terms with their brokerage, agents receive up to 100 percent of the commission fees. The commission covers the expenses they incurred while helping with the sale or purchase of a home, such as gas mileage, staging, or listing photos. It also covers their time and efforts.
At first, it might seem unfair that the seller has to pay for the help a buyer receives from their realtor. However, the seller knows upfront that paying the commission fee is their responsibility. They factor in that expense when pricing their home for sale. And, they can use money from the home sale to pay the fee.
Example of Realtor Commission Pay-Out
Let’s take a look at realtor commission payouts in action. Consider a scenario where a seller agrees to a 6 percent commission on the sale of their $300,000 home, which is $18,000.
- At closing, the buyer pays the seller $300,000 for the home
- The seller pays $18,000 to the listing agent’s brokerage, which leaves the seller with $282,000 from the sale of their home
- The listing agent’s brokerage pays the listing agent $9,000
- The listing agent’s brokerage pays the buyer’s brokerage $9,000
- The buyer’s brokerage pays the buyer’s agent
What Happens with For-Sale-By-Owner Properties?
According to Zillow, 36 percent of sellers start out trying to sell their home themselves. But, only 11 percent actually sell their home without a realtor. If you’re selling or buying a FSBO property, you’re probably curious about who pays the buyer’s agent fees.
Ultimately, it depends. An FSBO seller can offer a standard 2 to 3 percent commission to the buyer’s agent. In this case, the seller would specify the commission fee in the contract. The seller would pay the buyer’s brokerage after the transaction is complete. Then, the brokerage would pay the buyer’s agent’s commission.
However, an FSBO seller can also refuse to pay commission. After all, many sellers choose FSBO to avoid paying commission fees. In that case, the buyers would need to pay their realtor’s commission if they want to follow through with the home purchase.
FAQs about Buyer’s Agent Fees
Do I Pay My Agent if I Don’t End Up Buying a Home?
Buyer’s agents only receive compensation when they complete a transaction for you. If you decide not to buy a home—for any reason, you do not owe the buyer’s agent anything for their time and efforts.
If I Use Multiple Buyer’s Agents, Which One Do I Pay?
If you switch realtors during the home buying process, the only realtor compensated for their time is the realtor that helps you complete a transaction. They will receive half of the commission, paid out by the seller.
The only exception is if you enter into an exclusive buyer-broker agreement with a realtor. In that case, you will owe that agent a commission even if another agent writes your offer.
What is a Buyer’s Agent Fee in Florida?
In Florida, the commission rate is often six percent, meaning the buyer’s agent and the seller’s agent each receive three percent. Since it’s a percentage, the exact amount the realtor takes home varies depending on the purchase price.