How Much Is The Commission Of A Real Estate Agent and Who Pays For It?

Working With a Real Estate Agent

How Much Is The Commission Of A Real Estate Agent and Who Pays For It?

January 4, 2022

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The stakes are high when you’re buying or selling a home. You are dealing with a lot of money and any mistake could cost you greatly.

One of the main reasons people hire real estate agents is to be able to use their expertise and experience to avoid making costly mistakes throughout the home buying or selling process.

Another reason is that real estate agents take on many responsibilities (like dealing with paperwork, finding houses, hosting open houses, etc.) to keep the burden off of their clients. Some of the best real estate agents otherwise known as Negotiators, will even negotiate the purchase price of the property on your behalf to get you the best deal as well.

If you’ve considered hiring a real estate agent, then you’ve probably also thought about the cost of real estate agents. Before you determine if the benefits of working with a real estate agent are worth the cost, you need to understand how much they cost in the first place.

In this blog post, explain real estate agent’s commission and whether the buyer or the seller is responsible for paying it.


How Much Do Real Estate Agents Charge?

Real estate agents on both the buyer and seller’s side are typically paid 6% of the property’s total sale value. The commission fee is shared between the seller’s and buyer’s agents, resulting in a 3% cut for each. In the case of a home sold for $300,000, the real estate agents will be paid $18,000 total and $9,000 each.


Who Pays The Real Estate Agent Fees?

Understanding how much real estate agent commission costs is one thing, but understanding who pays for it is an entirely different discussion. The topic can be confusing for first time home buyers. To put it simply, the real estate agent’s commission is paid by the buyer but dispersed by the seller.

Real estate agents get paid after the sale is complete. After the mortgage lender approves the loan, the money for the sale is sent into an escrow account (sometimes controlled by a closing agent), where it stays until the closing process is finished.

When the sale is final, the buyer’s funds for the purchase of the house are released from escrow to the seller, typically through a check or wire transfer. The seller is required to use those funds to pay the real estate agent commission.

Sellers often include the real estate agent commission in the purchase price listed for the house. Make sure to ask the seller if the real estate commission is included in the total price or separate before closing.


What The Real Estate Agent Commission Covers

A real estate commission is the fee that an agent charges once a house has been successfully sold. In other words, all of the efforts that real estate agents put into helping their clients buy or sell a house is covered by the real estate commission.

Although 6% is the standard commission rate, it’s not a mandatory percentage. You can negotiate with your real estate agent for a lower percentage like 5% of the total sale value or less if you decide to take on some of the real estate agent’s responsibilities.

However, good real estate agents, whether representing the buyer or the seller, take on a lot of responsibilities to go above and beyond for their clients.

For example, a seller’s agent will stage your house for potential buyers to tour through and host open houses. They also understand the real estate market in your region and know what similar houses are getting sold for, which helps them correctly price your home.

Additionally, they have access to a Multiple Listing Service (MLS), which is a resource to find and list houses that is exclusive to real estate brokers and can properly market your house publicly to pull in many potential buyers.

The buyer’s agent, on the other hand, spends a lot of time sifting through listings to find houses that meet your criteria and budget. After finding potential houses, they handle all of the minutiae in setting up and scheduling house tours.

Buyer’s agents also have a network of trusted home inspectors that they can recommend to find any and all issues with the house and minimize unexpected expenses. Most importantly, good real estate agents will see that the deal goes through to closing.

Many real estate deals fall through because of hidden closing costs that the buyer cannot pay for or issues found at home inspection. Buyer’s agents find those unforeseen problems before closing and work to get their client the deal that best serves them.

Aside from those responsibilities, working with seller and buyer’s agents will give you the peace of mind that a real estate expert is alongside you every step of the way. Here are a few more of the benefits to hiring an agent…

  • They meet with you face to face to better understand and address any concerns you may have.
  • Can refer you to other reputable professionals such as loan bankers, videographers, and lawyers.
  • Help you create an offer as a buyer that will be looked at and at least considered.
  • Negotiate the real estate deal to include the best terms for you.
  • Assist you in gathering and filling out documents properly to avoid any legal troubles.
  • Can get you pre-approved for a mortgage with the right lender.


Streamline Your Search For a Good Agent By Using a Negotiator

Finding a real estate agent is easy but finding a good real estate agent is a lot more difficult. Negotiators consist of some of the best real estate agents that work to go above and beyond for their clients. With a Negotiator, you’ll get all of the benefits of working with a real estate agent and more because of their experience and dedication to get their clients the best deal possible. If you want to be sure you are working with a great real estate agent, then contact your local Negotiator here.