The short answer is no, buyers don’t pay realtor fees. If you’re a buyer, you’re likely saving for a down payment and closing costs already, so the good news is that you don’t have to worry about saving additional funds for a real estate agent.
However, it’s important to note that real estate commission is typically included in the home price, meaning the home sale price may be slightly marked up to include the realtor fee. So although a buyer doesn’t pay their realtor directly, they end up contributing when they purchase a home.
The seller, not the buyer, is the one that pays real estate agent fee, also referred to as real estate agent commission. However, since sellers take realtor fees into account when they set their listing or asking price, the seller doesn’t necessarily have to dig into their own pockets to cover it. The agent fees are simply subtracted from the money the seller receives once the home has sold. The commission is then distributed between the buyer’s agent and the seller’s agent. (Real estate agents also a cut to their broker, the person who is licensed to operate and runs the real estate brokerage.)
The seller pays the agent their commission fee on closing day, unless they have an alternate agreement. The closing day meeting signifies the end of the real estate transaction. It’s where closing costs are paid, the title is transferred, and any details regarding the mortgage are discussed. As part of closing, the real estate agents involved will offer their congratulations to the buyer and seller, and accept their commission. After closing, the home officially belongs to the buyer.
Realtor fees vary slightly by agent and location, but a typical commission rate falls between 5% and 6% of a home’s sales price. Some less experienced agents have lower commission fees, while more experienced agents may have higher commission fees. The total commission is typically split 50/50 between the seller’s agent (also called the listing agent) and the buyer’s agent. (Dual agents, who represent buyer and seller, would get the entire commission. Dual agency isn't legal in all states however.)
When you choose a listing agent, they will explain their fee structure and include them in the listing agreement, the contract you sign when you agree to work with a realtor. Make sure to ask about their fees upfront so you feel comfortable with your agent and the price you set for your home.
Yes, real estate commission is negotiable. However, the commission typically covers the marketing for the house (including photography, staging, and advertising) and the agent’s services (like showing the house and negotiating with buyers).
If you negotiate a lower fee, it’s possible that your house won’t receive as much advertising support or other services. If you’re okay with this, let your agent know. They may not be willing to negotiate, but it’s always okay to ask. With dual agents may also be willing to charge a slightly lower commission fee since they're the sole agent involved in the transaction.
There are several situations that make it easier to negotiate a lower commission fee, mostly when your property or situation is attractive for a real estate agent.
Although we don't recommend, you can negotiate fees with your agent by opting for a net listing. The agent's fees may be lower than the standard 6% but you could also end up paying them much more.
A low commission real estate agent is exactly what it sounds like: an agent that charges a lower commission percentage than other agents in your area. They are sometimes referred to as discount agents or flat fee agents. Depending on the type, they may accept either a flat fee or as low as half the percentage point of a traditional agent for their commission.
Discount brokers and real estate agents can be a great option in certain situations and will help you save money on your home sale. However, there are drawbacks to consider. Just because you hire a low commission listing agent, doesn’t mean you save on the buyer’s agent fees. Since buyers and sellers typically both hire agents that split a 5% to 6% commission, the buyer’s agent will still expect their cut of the home’s sales price (roughly 2% to 3% of the sales price). So in total, you only save 1% to 2% of the sales price by working with a low commission listing agent.
It’s also common for low commission agents to represent many clients at once to compensate for a lower commission on each property. This may result in less attention on your home, fewer marketing efforts, and reduced communication with your agent.
It’s difficult to avoid paying realtor fees altogether, but there are ways to minimize the cost. You can sell your home yourself (FSBO), which will eliminate the listing agent’s commission. However, you will still be responsible for the buyer’s agent’s fees so you won’t necessarily save money.
You can also sell your home to a house flipper or iBuyer, both of which make cash offers at a deep discount. While you’ll save on realtor fees, you’ll likely sell your home for a much lower sales price than you would if you used a traditional agent.
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