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Just to be clear, the buyer never pays a commission right? So if a realtor calls me and wans to help me find a home she will take the 3% from the seller's agent. I think this is correct but just wanted to be absolutely sure.
You are right that the typical scenario works like this: Seller hires an agent, Agent A, who is the agent for Broker A to list their home for sale and agrees to pay Broker A a percentage of the sale as commission. Broker A then pays Agent A a percentage of that amount. The same listing contract also allows Broker A to pay a cooperating broker, Broker B, some amount of the original commission (typically half of the total commission before paying Agent A but not always) for bringing Broker A a qualified buyer. So, as you can see, the buyer pays the seller who pays the seller's broker who pays the buyer's broker who pays the buyer's agent.
This is typical but there are exceptions to everything. The most common exception involves a buyer's broker agreement where the buyer agrees to pay the buyer's broker (and agent) a flat amount or a percentage of the purchase price less any commission paid by the seller's broker as described in the first paragraph. So, the buyer might sign an agreement where he or she agrees to pay their broker 3% of the sale, just as an example. The buyer then finds a home where the seller's broker is offering to pay the buyer's broker 3%. In this example, the buyer would not have any commission expense because the seller's broker is already covering the 3%. But, if the buyer purchases a listing where the seller's broker is only paying 2%, then the buyer would have to then make up the difference of 1% to the buyer's broker, per the terms of their agreement. Buyer agreed to pay a total of 3%, 3-2=1, buyer pays 1%. Hope that makes sense...
Just to be clear, the buyer never pays a commission right? So if a realtor calls me and wans to help me find a home she will take the 3% from the seller's agent. I think this is correct but just wanted to be absolutely sure.
If you want to be sure you will not reach into your own pocket for payment in addition to purchase price, confirm as much with your agent, and document that compensation agreement in your agency agreement. And ask your agent to not show you homes where no buyers agent commission is offered or documented to the agent.
Now a question:
Imagine two homes for sale. Identical homes.
One is listed at $600,000, "Firm," and includes 2.5% for a buyers agent offered by the listing agent.
The other is listed at $540,000 and sellers and their agent indicate they will negotiate on price, but will not pay a buyers' agent. And your agent wants 2.5% for the job.
Would you be glad to pay a higher price for the luxury of having the payment for your agent's services flow through the seller?
This should be a good debate. There are people that fall on both sides of this discussion as to who actually pays the commission.
But that isn't the question. The OP simply wants to know if he will have to come out of pocket to pay the agent, or if it the agent will be paid out of the sellers funds. Bbronston and Mike gave good answers, so there isn't much that can be added.
Just to be clear, the buyer never pays a commission right? So if a realtor calls me and wans to help me find a home she will take the 3% from the seller's agent. I think this is correct but just wanted to be absolutely sure.
"Never" is a pretty strong word and as we all know there are exceptions to every deal but in general and probably 95% of the time the seller is paying the commission.
Say you have been working with your buyers agent and they are giving you great service and he finds you the perfect house but it is a for sale by owner who hates real estate agents and refuses to pay any commission but you being a shrewd individual who knows the worth of a good real estate agent and the knowledge and the negotiating skills they bring you have the agent represent you anyway. He ends up saving you thousands of dollars. I think he has earned a commission.
Just to be clear, the buyer never pays a commission right? So if a realtor calls me and wans to help me find a home she will take the 3% from the seller's agent. I think this is correct but just wanted to be absolutely sure.
Never? No, not true.
Typically? Yes.
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