As we start to settle in after the chaos of the holidays, I wanted to start the year off with a simple myth that I’m always surprised isn’t well known. As a buyer, you are NOT responsible for paying your Real Estate Agent’s commission (!!!!). The only cost the buyers are responsible for are the closing costs, down payment and to cover any inspections (for more details on what you need when buying, see Myth #8 – The Only Up Front Cost Is A Down Payment ). Of course, you also have to pay for the house after you buy it 🙂
When you are on the selling side, you are the one covering the commission for both your agent AND your buyers agent. This is just the way the cookie crumbles – sometimes, buyers don’t realize this, which makes picking an agent a little scarier. The good news is, you can pick an awesome agent and you won’t have to pay for it until you SELL a house!
All of that being said, before you sign anything, make sure you read your contract and that there aren’t any caveats. Typically, the only amount you’ll see in your closing costs for your Realtor’s broker is their admin fee, which can range anywhere from $150-500 (sometimes more, but not usually). You might also see something about partial commission, so let me break down how the commission works…
The typical practice is a commission total of 6% of the sale price of the house – this covers commission for both real estate agents involved in the transaction (3% each). Lately, with the increasing popularity of Redfin and other discount agencies, the seller may choose to reduce their commission offer to 2.5% for the buyer’s agent (I’ll expand more on the topic of commission discounts in another post soon). Due to this, you may see a buyer’s agent add the caveat to their client agreement that says the buyer is responsible for paying that 0.5% difference, which would equate to the possible amount for “partial commission”. This doesn’t mean you’re automatically going to owe that half percent – it only means that if the house you decide you want is offering the buyer’s agent 2.5%, then you’d have to pay the rest.
When buying or selling, trust the process and don’t be afraid to ask questions. Your agent shouldn’t be hiding anything from you (just like you shouldn’t hide anything from us) – read everything before you sign and enjoy the journey!