I have recently spoken with several people who were confused as to who exactly pays Real Estate commissions. Hopefully the following will help explain where a Realtor is paid their commission from.
Let’s say I meet with Joe seller in order to list his home for sale. I explain to Joe that I charge 10 apples to list and help sell his home. Joe agrees, we sign the contract and we are off an running. I now want to attract buyers agents in the area who may have a buyer interested in Joe’s home. So, what I am going to do is offer a portion of the apples that Joe has agreed to pay me to any buyer’s agent in the area who brings in a buyer for Joe’s home. Let’s just say I am going to offer 5 of my apples to that agent. In most cases that is where a buyer’s agent (Same with renting agent) is going to make their apples. As a buyer, in almost all cases, it costs you nothing to use the services of a Realtor. Basically the buyers agent commission is paid for out of the listing agents commission with the seller. There is absolutely NO reason not to use the services of a Realtor if you are looking to buy or rent a home. This is especially important with new builds.
Now, there are at least two cases where you, as the buyer, may have to pay all or some of your Realtors commission. Your Realtor should explain this up front so you know it is a possibility. This should not come as a surprise, if it does find yourself another Realtor…fast!
Let’s say for instance you have been working with me looking for a home. One day you are out driving along and you see a home listed “For Sale by Owner.” You contact me and I contact the owner and explain that I have a buyer who is interested in seeing his/her home. The owner says that is fine but lets me know that he/she is not going to pay me anything for bringing in a buyer. Previously I let you know that if this were to happen, you then would have to pay me 5 apples for my service of helping you find a home. This would be one case where you, as the buyer, would be responsible for paying your agents commission.
Another instance would be where Susie agent only agrees to pay me 3 apples if I bring in a buyer for a home that she has listed. Again, I had previously let you know that if any agent offer me less than 5 apples for bringing in a buyer and successfully closing on their listing that you would have to make up the difference. You had agreed and therefore if you purchase this particular home you would have to pay me 2 more apples. Both of these instances are something you should be aware of as a possibility.
Bottom line, if you are looking to buy or rent a home get yourself a Realtor. In most cases it will cost you nothing to have someone there to help you through the often strenuous home buying process.
Buying a Home in the Phoenix West Valley: Who Pays Real Estate Commissions?
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