Who Pays Realtor Fees? Guide For Buyers And Sellers

by | Jan 4, 2024

The help of an experienced realtor is invaluable in speeding up the real estate transaction. Their experience, connections, and time could be the difference between buying the house of your dreams and spending another year waiting. As a seller, the benefits are immeasurable, too.

There are a lot of misconceptions floating around about realtors, specifically regarding their price tag. We will explain those after we answer the question you’re here for, “Who pays realtor fees.”

The Answer

In most real estate transactions, the seller pays the realtor fees. These fees are often paid out of the proceeds from the property sale. They’re usually a percentage of the sale price, split between the seller’s and buyer’s agents.

Key Takeaways

  • Commissions are usually negotiable. Buyers can negotiate to pay some fees, particularly in buyer’s markets or unique circumstances.
  • Details about a real estate agent’s fee should be in the agreement you sign when you hire an agent. It’s not awkward to ask how and when they’ll get paid, especially if you’re not experienced in real estate.
  • The nationwide average realtor commission was 5.8% in 2022.
  • The commission is part of the closing costs, but other closing costs are associated with selling or buying a home. Not including commissions, closing costs range from 3-4% of the home’s price for buyers and 1-3% for sellers.

What Are Realtor Estate Commissions?

Real estate agents typically work for a commission. They’ll receive a commission based on the percentage of money exchanged at closing. According to Homelight, the nationwide average realtor commission was 5.8% in 2022. Some agents may offer flat fees for individual services or the whole transaction.

The real estate commission is typically taken from the sale proceeds by the escrow company. The seller’s agent will then split the commission with the buyer’s agent.

Are they negotiable?

No federal or state laws dictate the commission percentage, so you can freely negotiate. It’s important to note that these practices can vary by region and the specifics of each real estate transaction. The only law is that the free market must set what each commission an agent charges. The Sherman Antitrust Act forbids price-fixing. This is when competing agents agree to set a standard sales commission or fee price.

In some cases, buyers may negotiate to pay a portion of the fees, particularly in buyer’s markets or unique circumstances. 

Word Of Caution: You Get What You Pay For

You can ask your agent to reduce their commission, but they’ll likely say no. If they do, you have to accept that it could affect the effort they put into helping you buy or sell your home. As with any profession, not all realtors are created equal. That said, most realtors are professionals who find their greatest pride in helping their clients win.

My point? Find a realtor with a track record of completing transactions, communicate what you want, and follow their lead.

New England Home Buyers can work without a realtor in our transactions because we’re seasoned investors with decades of real estate experience. We know exactly what pitfalls to look for and see things that most buyers and sellers will overlook. An experienced agent will see those same things. 

You’ll Find Commission Info In Listing Agreement

Details about the real estate agent’s commission should be spelled out in your signed listing agreement. Among other things, the listing agreement will state that the realtor/brokerage has exclusive rights to sell your home and that you’ll pay them an agreed-upon commission once the property sells. Most listing agreements last 60 to 180 days from the day you sign. 

Why Are Realtor Fees So High?

As the price of homes gets into the multiple hundreds of thousands, that means that commissions are creeping up and up. Is this a reason to negotiate a lower commission with your agent? Especially in San Francisco or Boston, where modest family homes sell for over a million dollars.

We say, “no”.

This is even more of a reason to pay your realtor a fair commission so they can get everything right in the transaction. 

This advice goes to bother sellers and buyers.

And for all things holy, please don’t go the FSBO route unless you need to sell your house fast. If you have time to find the right seller at the right price, according to NAR, you’ll lose an average of $120,000 if you go the FSBO route.

Realtor Commissions: The Bottom Line

The bottom line is that realtors are a huge asset to buyers and sellers. They help buyers find properties, find financing, help arrange inspections, and more. For sellers, they help list the property, market the property, screen buyers, and more.

If there’s a question if you should agree to a competitive fee with your realtor, the answer is “yes.” They should rarely factor in what realtor you choose to work with. If you’re in a situation where you need cash ASAP because of a tricky financial situation, you can work with a We Buy Houses company like New England Home Buyers to find a creative solution.

Otherwise, happy real estating! Is that even a phrase? I don’t know… Anyway, that’s it for now.

Get One-on-One Guidance

Contact us below or call (978) 228-1068 to speak with us about selling your home fast.

  • This field is for validation purposes and should be left unchanged.
Elie Deglaoui - Author

Author

Elie Deglaoui

Elie is our office admin who handles all our day-to-day tasks and makes sure we always stay on track. He brings his love of music and sports into the office everyday to always liven up the environment. His outgoing personality makes it easy and fun for him to talk to homeowners, homebuyers, and everyone in between.

Most Recent Posts

Canceling A Real Estate Contract In Massachusetts

Canceling A Real Estate Contract In Massachusetts

Can a seller or buyer back out of a contract? Wanting to back out of a contract isn’t uncommon. If you feel buyer’s remorse or have changed plans, you must know your options and the laws around canceling a real estate contract. It’s possible to cancel a real estate...

Title 5 Inspections | 101 For Buyers & Sellers

Title 5 Inspections | 101 For Buyers & Sellers

Of the over 3,000,000 homes in Massachusetts, about 650,000 have septic systems. In 1995, Massachusetts passed a state environmental code requiring septic systems and cesspools to be inspected before a home is sold. Here’s what you need to know: Title 5 dictates...

Can I Fire My Real Estate Agent? How To Fire An Ineffective Agent

Can I Fire My Real Estate Agent? How To Fire An Ineffective Agent

The clock is ticking, and you feel like your current real estate agent isn’t getting the job done. Working with the wrong agent can seriously hamper your plans, whether you're a buyer or seller. You’re here because you want to know two things: Can I legally fire my...

Hoarder Cleaning Checklist (With Free Downloadable List)

Hoarder Cleaning Checklist (With Free Downloadable List)

We’ve cleaned our fair share of homes, so we know a thing or two about hoarder cleaning. We assembled this checklist so you can clean it as effectively and safely as possible. Safety is a huge priority when cleaning a hoarder's home. Even if it’s your living space,...

What Happens When A House Is Deemed Uninhabitable

What Happens When A House Is Deemed Uninhabitable

Finding out your home has been deemed uninhabitable can be quite shocking. If it’s your primary residence, you’ll need to find somewhere else to live until it’s repaired. As a landlord, you have an obligation to your tenants, which can sometimes hurt your pockets. ...