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Understanding Real Estate Commissions: What Buyers and Sellers Should Know
You may have heard that home sellers are no longer required to pay the buyer’s agent commission. While that may sound like a big change, it’s important to clarify: sellers have never been obligated to pay the buyer’s agent commission. However, not all agents have explained this clearly in the past.
How Are Real Estate Agents Paid?
For Sellers:
Your listing agent should discuss their commission with you and explain that any offers you receive may include a request for you to provide compensation to the buyer’s brokerage. Should that happen, you can either approve, decline, or negotiate the request. Requests for buyer brokerage compensation should be viewed as part of the total offer package.
For Buyers:
Your agent will outline their commission in the buyer agency agreement you sign. This agreement confirms that your agent will be paid at closing—whether by you, the seller, or a combination. It usually indicates the agent’s commission as a percentage of the sales price.
For example, if you agree to a 3% commission with your agent and the seller agrees to 2%, you would be responsible for only 1% at closing. Remember, as a buyer, you can always negotiate the purchase price to help offset these costs.
Final Thoughts
There is no standard commission rate in real estate—commissions are fully negotiable. That said, not all agents may be open to negotiating their fees. It’s always best to have a transparent conversation with your agent to understand your options and make informed decisions.
