Questions Every Home Buyer Should Ask: Who Pays Real Estate Commissions?

Real estate commissions are generally paid by the seller. However, this is not always the case.

 

[Video Transcript]

Hey, you all. Zach McDonald, your real estate agent with Real Property Associates. Today’s question that every home buyer should ask is who pays real estate commissions? We’ve talked about how much is paid and I honestly kind of shared a little bit about who pays in that video. But, I want to dedicate this video just to the idea that in a real estate transaction, a lot of times the seller is paying real estate commissions. I’d say in about 95 to 98% of the time. Actually, probably more like 98% of the time. They’re going to hire a listing firm. They’re going to hire the firm and the agent, so listing agent. Part of the contract is that a portion of that, it’s generally half, is then shared with the selling firm or the buyer’s agent’s firm.

Real estate agents aren’t getting paid directly. Their firms are getting paid and then they compensate their agent. That commission is paid by the seller to the selling firm. If I am your buyer’s agent, I get compensated out of the proceeds of the sale. The purchase price, there’s a percentage usually five to 6% of the purchase price is split between the listing firm and the selling firm and that’s how a real estate agent is compensated.