Who Pays the Commission?

The Seller

In many cases, the Seller has signed a listing agreement with his agent specifying a certain fee to be paid for selling the home.  It can include provisions for splitting that fee with the selling agent, regardless of agency representation.

The Buyer

In some cases, the Buyer pays his agent a commission as set out in their written agreement.  If the buyer pays his agent from his separate funds, it would not be appropriate for the buyer’s agent to also accept part of the fee paid by the seller.

Indirectly, The Buyer Does

However, an argument can be made that the buyer indirectly pays the commission even if it comes from the seller’s proceeds.  The assumption then is that the buyer could have bought the home for less by dealing directly with the seller.  By having an Realtor handling the transaction the buyer is protected in many way that he or she would not be with out a professional real estate agent: disclosure and representation of all known facts related to the property and to the details of the transaction; applying the neutral negotiating skills of the realtor which can frequently result in a better price and/or terms for the buyer, among many others. (Julie, you may want to list more, but these two may be enough).

The professional realtor provides oversight and compliance with the proper steps of the real estate contract, from start to finish, by both parties.  In short, your interests are better represented and protected.

The Client Determines How the Agent is Paid

The seller agrees to pay his agent in the listing agreement and the sub-agent of the seller who sells the property.

The buyer agrees to pay his agent if buyer agency is elected.  In some cases, the buyer directs his agent to try to be paid from the seller’s proceeds.

Each party pays their agent as specified in their written agreement.