How Does My Real Estate Agent Get Paid When Buying a House
Real estate agents typically earn their commission through the sale of a property, and their compensation is generally paid by the seller. Here's how it works:
1. Listing Agent's Commission When a property is listed for sale, the seller signs a listing agreement with a real estate agent. The listing agent is responsible for marketing the property, finding potential buyers, and facilitating the sale. The commission for the listing agent is usually a percentage of the final sale price, and this percentage is agreed upon in the listing agreement. It is common for this commission to be split between the listing agent and the buyer's agent.
2. Buyer's Agent's Commission The buyer's agent, representing the person purchasing the property, is also entitled to a commission. This commission is typically paid by the seller from the proceeds of the sale. The buyer's agent helps the buyer find suitable properties, negotiates on their behalf, and assists throughout the buying process.
3. Splitting the Commission In many cases, the total commission agreed upon in the listing agreement is split between the listing agent and the buyer's agent. The specific percentage split can vary and is negotiable.
It's important to note that while the seller is responsible for paying the commissions, the funds for these payments usually come from the sale proceeds. In other words, the seller deducts the agreed-upon commission amounts from the final sale price before receiving the remaining proceeds.
As a buyer, you typically don't directly pay your agent. Instead, their commission is covered as part of the overall transaction costs the seller pays.
