Who Pays the Buyer’s Agent?

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If you are planning to purchase a house in the near future and, in order to avoid any complications, have decided to hire an agent to guide you through it, a buyer’s agent is the type you should be looking for. Most people are only aware that a buyer’s agent is paid a commission. In such cases, due to lack of information, many buyers hesitate to hire an agent because they do not know who is actually responsible for paying the agent and on what terms.

Now, to know about how payments are made to real estate agents, one must first know what a commission is and how a commission is transferred to an agent.

AGENT COMMISSION

A commission is a small percentage of the total price of a house which is given to the agent in exchange for his services during the purchase deal. Commissions are deducted from sales proceeds and a fixed commission percentage, which is decided during an agreement between a seller and the agent, is taken out from the net price that a buyer pays a seller for a certain piece of property.

BUYER’S AGENT

If you have acquired the services of a real estate buyer’s agent while buying a house, this agent would have to be paid a commission which would have been decided beforehand while signing the buyer’s agreement. The house seller typically pays the commission. These are not directly paid to the agents. Instead, all sale commissions go to a real estate broker who the agent works for. Commissions are divided by the broker and are then further paid to the agents.

The amount an agent gets depends upon his work experience. Some senior and expert agents receive 100% commission and are only required to pay a small desk fee to the broker. On the other hand, agents new to their jobs get only 30% to 40% of the total commission from the broker.

HOW IS COMMISSION DIVIDED

In the case of buyer’s agent, they are further paid by the seller’s agent. The broker presents the selling agent with a fixed amount of commission that the seller pays according to the seller’s agreement terms. The seller’s agent further divides the commission amongst himself and the buyer’s agent.

The ratio in which the commission is divided between the seller’s agent and the buyer’s agent is not fixed. It can either be equal or the seller’s agent can choose to keep more for himself.

Special Cases

However, there are cases in which the owner chooses to sell the house all by himself. Thus, if he sells the house without any help from a third party, no agent or broker is involved, and no commission is decided or offered by the seller. In such a case, if you choose to hire an agent, you will have to pay for the agent yourself.

Thus while choosing or hiring a buyer’s agent, make sure you go through the seller’s agreement’s terms and the broker involved in order to avoid any confusion that may occur when it comes to paying the agents.

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