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Home Buyers Education: Who Pays the Real Estate Commission?

Your realtor has sure spent a lot of hours with you searching for that perfect home. She has been there during your appointment with the mortgage lender, and with you inside many homes in the past few weeks. She even makes sure that your kids don’t run out into the street during showings. So after all of these hours of searching and working to get you onto the path of home ownership, how is she getting paid?

Most realtors are paid by the seller in a real estate transaction. Although many times there are two agents to every sale, the buyers agent and the sellers agent, the owner of the home is still on the hook for the total real estate commission.

This is because in years past, there was no such thing as a buyer’s agent. Every realtor worked for the seller, and did not represent the buyer at all. But a lot of changes have occurred in the real estate industry over the years, and even though now agents can either represent the buyer of a transaction or the seller, it is the seller who still pays the total real estate commission. Most of the time.

There are agreements that can be made between buyers and agents that specify that the buyer will in fact pay the agent’s commission. This should have been discussed with you thoroughly if you have already signed papers with your agent detailing this kind of agreement. Typically if the buyer is responsible for any commissions, it is only to their agent, and not to the seller’s agent.

Most people are aware of the fact that realtors do not get paid until they sell you a home and that home closes. There are no hourly wages unless they have a special arrangement with their broker or employer. This gives your agent incentive to find you the home that you will be happy living in. It is not legal for agents to accept any payment from a client that has not been specifically described beforehand and that does not get submitted to the managing brokerage.

One good thing about the sellers obligation to pay the real estate commission is that they can take it out of the proceeds of the sale of their home, among other costs of selling. This enables buyers to put more of their hard earned money towards the down payment and closing costs if necessary.

Meribeth Phipps has been a real estate agent since the year 2000 in Washington State.

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