When it comes to purchasing or offloading a property, one question that often arises is: who is responsible for the estate agent’s fee, also known as the commission? This article aims to clarify the distribution of this expense.
Typically, the commission for a real estate transaction is borne by the seller. This fee is then split between the seller’s and buyer’s agents. It is agreed upon at the time of listing the property and is typically a percentage of the property’s selling price.
The customary commission is 5-6% of the property’s selling price, divided equally between the seller’s and the buyer’s agents. For instance, if a property is sold for $300,000 with a 6% commission, the total commission would be $18,000. Both agents would receive $9,000 each.
However, it’s important to note that commission rates are not set in stone and can be negotiated. In some cases, sellers might negotiate a lower commission if they are selling a high-priced property or if they promise to use the same agent when purchasing their new home.
The buyer’s agent’s commission encourages agents to show the property to potential buyers. If there was no incentive, agents might be disinclined to present the property to their clients.
Although the seller bears the brunt of the commission, indirectly, the buyer also contributes. The commission is factored into the selling price of the property. Therefore, the buyer’s payment does indirectly contribute to the commission.
In conclusion, while it is technically the seller who pays the realtor commission when a property is bought or sold, the cost is factored into the price of the property, meaning that the buyer indirectly shares in this expense. As with many aspects of buying or selling a property, understanding who pays the realtor’s commission can help both buyers and sellers negotiate better deals and navigate the real estate market more effectively.