Does the Buyer Pay the Realtor?

Does the buyer pay the realtor
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Published By Jennifer Jewell

Question: Does the Buyer Pay the Realtor?
Answer: Yes, typically the seller pays the realtor’s commission, but it can vary depending on the agreed-upon terms.

Does the Buyer Pay the real estate agent? Who Covers What and Why

When it comes to buying a home, many people wonder who pays the real estate agent’s commission. Is it the buyer or the seller? The answer is not as straightforward as you might think.

Traditionally, the seller pays the real estate agent’s commission, which is typically a percentage of the sale price of the home. However, this doesn’t necessarily mean that the buyer doesn’t pay anything.

Here’s what you need to know about who pays the real estate agent’s commission and how it affects the buyer.

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Seller Pays the Commission

As mentioned, it is standard practice for the seller to pay the real estate agent’s commission. The commission is usually around 5% of the sale price of the home, but it can vary depending on the local real estate market and the agent’s agreement with the seller.

The commission is typically split between the seller’s agent and the buyer’s agent. The seller’s agent represents the seller in the transaction and is responsible for marketing the property, negotiating the sale price, and handling the paperwork. The buyer’s agent represents the buyer and helps them find the right property, negotiates the purchase price, and guides them through the home buying process. [ 1 ]

So, while the seller pays the commission, the buyer’s agent is still compensated for their services.

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Related Article: How do Realtors split commission?
Related Article: Are Realtor fees negotiable in Ontario?

How It Affects the Buyer

While the buyer doesn’t technically pay the real estate agent’s commission, it can still affect them in several ways.

First, the commission can impact the sale price of the home. If the seller has to pay a high commission, they may be less likely to negotiate on the price of the home. This means that the buyer could end up paying more for the property than they would if the commission were lower.

Second, the commission can affect the buyer’s agent’s motivation to help them find the right property. Since the buyer’s agent is compensated based on the commission, they may be more motivated to show the buyer homes that offer a higher commission, rather than homes that are the best fit for the buyer’s needs.

Finally, some sellers may factor in the commission when setting the sale price of the home. If the seller knows they will have to pay a high commission, they may set a higher sale price to compensate for the cost. This means that the buyer could end up paying more for the home than they would if the commission were lower.

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Alternative Payment Structures

While it is traditional for the seller to pay the real estate agent’s commission, there are alternative payment structures that can benefit the buyer.

For example, some real estate agents offer a flat fee or hourly rate instead of a commission. This can be beneficial for buyers who are purchasing a lower-priced home or who want more control over the costs of the transaction.

Another option is for the buyer to work with a real estate agent who offers a buyer rebate. This means that the buyer’s agent will give a portion of their commission back to the buyer as a cash rebate after the sale is complete. This can help offset some of the costs associated with buying a home, such as closing costs or moving expenses.

In summary, the seller typically pays the real estate agent’s commission, which is split between the seller’s agent and the buyer’s agent. While the buyer doesn’t technically pay the commission, it can still affect them in several ways, such as impacting the sale price of the home or the motivation of the buyer’s agent. However, there are alternative payment structures that can benefit the buyer, such as flat fees or buyer rebates. If you are buying a home, it’s important to discuss your options with your real estate agent and consider how the commission may impact your overall costs.


References

1. https://www.youngandthrifty.ca/real-estate-agent-commissions-decoded/

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