Who Pays for the Buyer’s Agent?

January 10, 2020

It is always best to use a Realtor when you are buying or selling any kind of real estate. The great thing about buying real estate is that the buyer’s agent is free to the buyer.  That’s right! 100% FREE to the buyer!

The Seller pays the Real Estate Commission

When a seller lists a home, the seller and the listing broker come up with an agreement on the amount of commission charged.  Typically this is 6%. The seller and listing broker also come up with an agreement on what part of this commission will be shared with a buyer’s agent that brings a buyer.   That amount is usually split where each broker received 3% commission from the seller.

Who does the buyer’s agent work for?

A common misconception is that since the buyer’s agent is paid for by the seller, that they work for the seller. This is untrue. A REALTOR has a fiduciary duty to their client. This means that a REALTOR is obligated to put the interests of their client above their own at all times. 

 
When your buyer’s agent asks you to sign a Representation Agreement, this is in your best interests as it establishes the fiduciary relationship between buyer’s agent and buyer. This also will contain a confidentially clause within the agreement that is a great thing for you. 


Even if the agents work for the same company, the buyer’s agent works for the buyer and the listing agent works for the seller, and each has a fiduciary responsibility to their particular client.

I can save 3% on the purchase price if I don’t use a Realtor

False…usually.

And this is a very bad idea.

As stated above, the seller and the listing broker come up with an agreement on commission. The listing broker will still get 6% commission from the seller whether or not a buyer is represented by their own agent. It is up to the listing agent to make the offer to cut the commission agreement with the seller for a buyer that is not represented. In this scenario, most listing agents will not cut the commission. They are doing double the work, so why would they do it for half of the amount that they normally get paid?


In addition, and more importantly, remember that the listing agent works for the seller. They do not represent you as a buyer, and in fact, anything that you tell the listing agent is their responsibility to pass on to the seller.  So, if you were to say, "see if they will take $235,000 for the house, but I will go higher,” the listing agents fiduciary responsibility is to pass this entire statement on to the buyer, including the ‘I will go higher’ part. 


Now, it is true that some agents may have an agreement with the seller to come off of the commission if there is an unrepresented buyer, but these deals are not the norm.

It will always be in your best interest to use a buyer’s agent. Realtors help people buy and sell houses every day. In fact, in the past week, they have probably been a part of the purchase and sales process more than you will ever be in your lifetime! Using a REALTOR is the best thing you can do for yourself and your home purchase, especially since it doesn’t cost you anything.

Follow this link for more information on selecting the right REALTOR for you.

About the author 

Jack Allen

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