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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 structure with you and also whether you’re willing to offer compensation to the buyer’s agent. If you choose to do so, the details—such as the percentage—will be included in your listing agreement. You can decide whether to disclose the commission amount upfront or leave it open for negotiation during the offer process. Keep in mind that choosing not to offer buyer agent commission may impact the offers you receive, as buyers may need to cover that cost themselves.
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 of both.
For example, if you agree to a 3% commission with your agent and the seller offers 2%, you would be responsible for the remaining 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.
