do buyers pay commission?

Asked by James Chi, Los Angeles, CA Sat Jun 16, 2012

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28
Cheri Bright’s answer
Cheri Bright, Agent, Santa Monica, CA
Tue Mar 5, 2013
No. The buyer does not pay. The seller has the agreement with their listing Broker. Once the agreed commission amount (usually3%) is confirmed by both parties the seller will incorporate this into his listing price. The seller at transfer will pay the commsion and escrow will divide the 3% to both listing agent and buyers agent as per the agreement.
3 votes
the agent rep[resents both us and the seller. she now says we pay both her commission for buying the house and again a commission for the other party's selling their house. Is this right?
Flag Sun May 15, 2016
So, if a buyer chooses to us and agent he must understand that he is basically paying for both the seller and buying agent considering the price that he pays will be inflated to cover both agents. It may come out of the final price, but who pays that final price, ????? Yes, the buyer.
Flag Sun Jul 26, 2015
Real estate commissions are a technical expense of the seller, but a realized expense of the buyer.
Flag Wed May 27, 2015
John Goddin, Agent, Chapel Hill, NC
Sat Jun 16, 2012
Typically, the commission to the buyer's agent is paid at closing out of the sales price (sellers proceeds) using money brought to the closing by the buyer, so who is actually paying the commission can be open to debate. The seller agrees to pay a commission to a listing agent, who offers part of that commission to the agent working with the buyer. The norm for many years was for the buyer's agent to accept whatever the listing agent offered rather than agree up front with their client (the buyer) what the agent's compensation will be. This can lead to extreme conflicts of interest for the buyer's agent if, for instance, the buyer is trying to decide between 2 properties offering different commission levels (say one offering 2.5%, the other 3%) and is looking to their agent for guidance.

It is now becoming more common for buyer's agents to negotiate their fee with the buyer and if the fee offered by the seller is less than the fee agreed upon, the buyer may have to pay the difference out of pocket. If the fee offered by the seller is more than the fee agreed upon, the buyer's agent should rebate the difference to the buyer, but many buyer agency agreements allow the agent to keep any overage, which fails to resolve the conflict of interest. My policy is to rebate the difference. I also offer programs where buyers can pay by the hour and get the entire commission rebated, or pay a retainer and have the amount due at closing substantially reduced and thus the rebate substantially increased. It is very important for buyers to understand how and how much their agent is paid and what the agent's incentives are in regards to compensation. Be wary of any buyer's agents who promote their services as free because they are paid by the seller. If the seller did not have to pay the buyer's agent, they could sell for less and net the same, so the buyer's agent fee is ceratinly not free to the buyer, just built in to the sales price. Nobody works for free and that agent is more interested in promoting their own self interest than in providing the buyer true client level services.
3 votes
Buying a small ranch home a family just wants it gone. Only $115k. I pay closing costs, but the seller will need to pay 6% to listing agent. 1000s of homes and realtors to choose from in case they say no.
Flag Tue Jun 27, 2017
Tina Mounger, Agent, Knoxville, TN
Wed May 27, 2015
Real estate commissions are a technical expense of the seller, but a realized expense of the buyer.
1 vote
Terry McCarl…, Agent, Cape Coral, FL
Tue Mar 5, 2013
That is a negotiable issue. More often than not the seller pays the full commission but I have seen cases where the buyers agent did charge a commission to the buyer so make sure you inquire on this specific item up front when you are interviewing agents to represent you.
1 vote
MaryAnn Morr…, Agent, San Diego, CA
Sun Aug 19, 2012
It will depend on your particular transaction and your agreement with your agent. Most of the time if you a buying a home through the MLS system the seller has agreed to pay for the services of the buyer's agent.
1 vote
Sona Gallatin, Agent, Santa Clarita, CA
Sat Aug 18, 2012
No, seller pays commission and listing agent splits with buyers agent. Hope that helps:)

Good luck
1 vote
Madelaine Ko…, Agent, Los Angeles, CA
Sun Jul 1, 2012
Hi James,
Here in California the seller pays the commissions it is written in the listing contract that they sign with agent/broker, it comes out of the proceeds of the sale.. and yes, on a short sale the banks pay agents and on foreclosures as well. The bank hires agents to list and sell their properties and they pay commissions. SO sellers pay the commissions out of the proceeds.


Hope that helps, so you can hire the agent you want....I specialize in the Westside of Los Angeles.

Madelaine Kolisnyk, Realtor
Power Brokers International
310.869.1712
http://www.madelainek.com
1 vote
Daniel Shi, Agent, Cupertino, CA
Thu Jun 21, 2012
Hi James,

Normally, the seller pays all commission (to listing agent and buyer agent, i.e. they split) out of the sale proceeds. But in one scenario I can think of: if buyer signs an exclusive buyer-representation agreement with a buyer agent, and agrees to pay the agent a fee upon successfully finding and closing a transaction on a property, then this is permissible. But this is rare case though, since exclusive buyer-representation is not that common.

Daniel Shi
dshi@sogorealty.com
1.888.785.8818 ext.100
http://SoGoRealty.com
1 vote
Kawain Payne, Agent, Seal Beach, CA
Mon Jun 18, 2012
Hello James,

The short answer is NO.

Buyers do not pay a commission directly to their agent. Buyers purchase the home, the seller pays a commission to their agent based on the sales price. Seller's agent splits his/her commission with the buyer's agent.

Best of Luck to You,

Kawain Payne, Realtor
1 vote
Lance King, Agent, San Francisco, CA
Sat Jun 16, 2012
Although as pointed out below the overwhelming majority of the time the seller pays the commission, there are a few instances where the buyer would pay:

1. When a buyer signs an agreement that he pays the agent if he buys any property and then buys direct from a developer who doesn't offer commissions to agents;

2. When a buyer wants representation to buy a FSBO property and the seller doesn't offer commission;

3. When a buyer wants to buy a foreclosure at auction and wants and agent to advise them (many won't for liability reasons)

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
1 vote
Sona Gallatin, Agent, Santa Clarita, CA
Sat Jun 16, 2012
Never.
Sellers, whether a bank or private individuals who are selling always pay the commission.
1 vote
that is false, there are many times, when a buyer really wants a particular property, the seller will not pay a fee to that buyers agent, so the buyer pays the commission, Happens for high end residential and commercial a lot, especially in California?
Flag Wed Jan 15, 2014
that is false, there are many times, when a buyer really wants a particular property, the seller will not pay a fee to that buyers agent, so the buyer pays the commission, Happens for high end residential and commercial a lot, especially in California?
Flag Wed Jan 15, 2014
My NC Homes…, Agent, Chapel Hill, NC
Sat Jun 16, 2012
It's a possibility but not common. Typically the Seller pays the commission to the listing company and this in turn is split between them and the Buyer Brokers firm.

I cannot reccomend enough that buyers should have a dedicated buyer broker to represent them the way a seller has a listing agent to represent their interests. I've attached a link below to one of the most popular blogs I've written on this subject and hope you find my suiggestions on how to find a great broker helpful.

Good luck and happy house hunting.
1 vote
Shanna Rogers, Agent, Murrieta, CA
Sat Jun 16, 2012
Hi James,

Usually the seller pays all commission - both the Listing Agents' and the Buyer's Agent's.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
1 vote
Rich, Other Pro, Las Vegas, NV
Thu Jun 4, 2015
Typically the seller pays the commission..

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0 votes
Kirsten Priz…, Agent, Naples, FL
Wed May 27, 2015
The seller pays commission, except negotiated differently between all parties.
0 votes
Sona Gallatin, Agent, Santa Clarita, CA
Tue Mar 5, 2013
No Buyers do not pay! Seller agrees to pay the commission upon signing the listing agreement, whatever it is, it's decided at that time.
0 votes
Carla Muss-J…, , Portland, OR
Sat Jun 30, 2012
Buyers can pay commissions to their Buyers Agent, absolutely. As a licensed professor we can charge a fee, a retainer, a commission, an hourly rate to our clients. I've charged a retainer fee, I've charged hourly and I've have had my buyers clients pick up the difference in commission with the list agent when their co-op wasn't my office minimum.

Commissions are, typically, paid by the listing agent to the buyers agent in a co-op fee split which is advertised in the listing as a BAC. Anyone that tells you that "sellers pay" the buyers agent isn't accurate or doesn't understand the broker co-op fee split [rolling eyes}. The BAC is paid to the buyers agent out of the over commission contracted by the listing agent with the seller. The Buyers Agent BAC is paid out of the listing agents overall commission. Sellers don't pay, directly. Period.
0 votes
Dorene Slavi…, Agent, Torrance, CA
Sun Jun 17, 2012
Dear James,
No, the commission is normally paid by the seller of the property, an amount pre arranged between the listing agent and the seller. There are instances where you might be responsible for your buyer agents commission. This is something that should be discussed at your first meeting with your buyer agent.
0 votes
Kathleen Bec…, Agent, Santa Monica, CA
Sat Jun 16, 2012
Hi James:

Usually the commission is paid by the Seller, however, in some cases, an agreement may be made for the Buyer to pay a commission. It is all negotiable.

Good luck and all the best,

Kat Becker, Realtor
Prudential California Realty
katbecker@prula.com
0 votes
Craig Whitlo…, Agent, Los Angeles, CA
Sat Jun 16, 2012
Hi James -

Yes, there are just a few instances where a buyer would pay a commission as Lance pointed out below. Thus the seller in most cases pays the commission to the brokers on both sides of the transaction. I'd like emphasize the importance of having your own exclusive representation versus working with the listing agent. Your best interests can only be served by having your own broker represent you.

If you'd care to discuss this further or have any questions regarding market conditions here on the LA Westside where I specialize, I invite you to contact me for a confidential consultation. It's free . . .

Craig Whitlock
Realtor®
Coldwell Banker Brentwood
310-488-4399
craigwhitlock@coldwellbanker.com
WestsideHomesGallery.com
0 votes
Ron Escobar -…, Agent, Beverly Hills, CA
Sat Jun 16, 2012
Short & sweet:

Commission is fully negotiable. Buyer and or seller can pay them separately or together. If it will get you a good deal pay it, but is up to you to decide what you want to do.

Best of luck!
0 votes
Marilyn Jenne, Agent, Los Angeles, CA
Sat Jun 16, 2012
Traditionally, you are not obligated to pay (although I do like that since the purchase funds effectively come back to your agent, you are, in essence, paying anyway). They say everything is negotiable.

If you are still selecting an agent to work with, you may want to speak with a couple others (since most buyer reps do not charge commission to you) and see if you like how they would represent you.
0 votes
Richard Czar…, Agent, Los Angeles, CA
Sat Jun 16, 2012
I agree with the response of Lance King. There are only a few examples when buyers would pay commission. In most cases the buyer's agent gets paid as a seller's co-operating agent. In other words the seller agrees to pay a percentage of the sale price to his/her agent. The seller's agent on the other hand allocates a portion of that commission to the buyer's agent who brings a buyer to the table. I don't know if the rest of the respondents would agree with me, but if you find a buyer's agent who asks you to pay him or her a commission, maybe it is a time to look for another agent.
0 votes
Madelaine Ko…, Agent, Los Angeles, CA
Sat Jun 16, 2012
Good Morning James,

Sellers pay commissions, it is in the listing agreement.
Your closing costs are:
Loan fees, if purchasing a loan, ask your lender how much they charge! (Appraisal)
Escrow and Title fees. Depending on company.
Inspections are your up front costs, upon acceptance of offer,it is your due dilegence period.
Taxes pro-rated, so you may get a Supplemental tax bill upon closing.
Homeowners insurance,due upon closing along with downpayment

Hope that helps and good luck, I know 90025! (WLA)
Madelaine Kolisnyk, Realtor
Power Brokers International
310.869.1712 | #dre01377862 lisence # in the state of California
http://www.Madelainek.com You can search property here and have it emailed to you auto-matically.
0 votes
allan erps,A…, Agent, Pearl River, NY
Sat Jun 16, 2012
The only general time a buyer/tenant pays in this are is on rental property. Good answers below and paying a commission as a Buyer is extremely rare. Be careful as some Buyers Agents will try to guarantee themselves a certain percentage(say 3%). If the commission given by the Seller is 2.5% they may try to get the balance from you. READ your Buyers Agreement before signing and discuss with Agent beforehand as they must disclose such an arrangement. Best of Luck!
0 votes
Roger Montgo…, Agent, Topeka, KS
Sat Jun 16, 2012
The commission is paid by the seller to his/her listing agent who then divides it with the buyer's agent providing the buyer has been wise and has signed an agency agreement with one. In the case of For Sale By Owner properties, the seller will often, but not always, agree to pay a buyer's agent commission. If not, then it is the buyer's responsibility to pay the commission.
0 votes
Phil Rotondo, Agent, Melbourne, FL
Sat Jun 16, 2012
With only the buyer bringing funds to the table.........hmmmm
0 votes
Roland Vinya…, Agent, Sprakers, NY
Sat Jun 16, 2012
Not usually. There are (a very few) times when they pay for a buyer's agent when they choose to be so represented.
0 votes
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