How to Pay the Real Estate Agent Commission


Whether you’re buying or selling a home, real estate agents are a valuable resource to guide you through the process. They can help you understand real estate terminology and what you’re agreeing to when you sign a purchase contract. They can also offer advice on what to expect during your transaction and what to look out for. While most people know that agents need to be compensated for their services, not everyone knows how much they actually get paid — or even how commissions work in general.

How real estate agents are paid typically depends on how the agent is employed by their brokerage. Those that work for full-service brokers, for example, are usually paid a percentage of the sale price of each property they sell or buy for their clients. This amount can be negotiated depending on the market, the type of property and the agent’s reputation and experience. Also read

The exact amount of commission is spelled out in the listing agreement signed when you hire an agent. Generally, the rate is somewhere between 5% and 6% of the final sales price. The seller is responsible for paying this fee to the buyer’s agent unless the parties choose to waive it.

While you can negotiate a lower commission, it’s important to remember that the agent’s services are valuable and they need to be properly compensated for them. If you try to cut the commission too much, it could hurt their ability to sell your home quickly and for a good price.

Aside from negotiating the rate, there are other ways to reduce your commission bill. You can ask your agent to share some of the cost with you by offering a flat fee or co-brokerage arrangement. Another way to save on the commission is by working with an all-cash buyer. While you can’t prevent buyers from hiring their own agents, you can limit their involvement by targeting unrepresented buyers, such as those who find your home on social media or other channels.

If you’re selling your home, consider asking for a reduced commission in exchange for more upfront cash to cover marketing expenses like professional photography and 3D tours. You can also ask your agent to cover other costs associated with the transaction, such as office supplies or gas for showings.

Keep in mind that if you’re purchasing a home, you can’t avoid paying the buyer’s agent’s fee unless it’s agreed to by both parties in writing. However, if you’re dealing with an all-cash buyer, this might not be an issue.


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