Traditionally, in the United States, the realtor commission for the buyer is paid by the seller, not the buyer. Here's how it typically works:
1. Seller Agrees to Pay Commission: When a seller lists their property with a real estate agent or brokerage, they typically sign a listing agreement that outlines the terms and conditions of the sale. In this agreement, the seller agrees to pay a commission to the listing agent and the buyer's agent.
2. Listing Agent and Buyer's Agent Commission: The commission is usually split between the listing agent (the agent representing the seller) and the buyer's agent (the agent representing the buyer). The exact split can vary but is often 50-50.
3. Payment at Closing: The agreed-upon commission is paid at the closing of the real estate transaction. It's typically deducted from the proceeds of the sale before the seller receives their net proceeds.
4. No Direct Cost to the Buyer: The buyer does not typically pay the buyer's agent's commission out of their own pocket. Instead, it is indirectly paid by the seller as part of the overall transaction costs.
It's important to note that while the buyer doesn't directly pay their agent's commission, they should still carefully consider the terms of their buyer's agency agreement with their agent. This agreement outlines the agent's responsibilities, compensation, and any obligations on the part of the buyer. Buyers should also be aware of any potential conflicts of interest that could arise if their agent is representing both the buyer and the seller in the same transaction (known as dual agency), as this can vary by state and local regulations.
Additionally, while it's the seller who pays the realtor commission, some argue that the cost is indirectly passed on to the buyer through the property's sale price. In other words, the seller may factor in the cost of the commissions when setting the listing price for the property, which can impact the final sale price negotiated between buyer and seller. However, this is a complex aspect of real estate pricing and negotiation.
