Who Pays The Fee?

Who Pays The Fee?

Buyers have always had the right to have their own agent representing them in the transaction and working in their best interests. But, until recently, this meant that the buyer would have to pay their agent’s fee out-of-pocket. However, thanks to a number of factors including market demand, increased consumerism, and commercial real estate practices which have filtered through to residential real estate, these days the buyer’s agent typically receives compensation from the seller’s proceeds of the sale, just the same as a seller’s agent would and a broker’s broker or subagent would.

Who Really Pays?

The question of who pays the real estate agent’s fee is a perennial controversy, much like the chicken/egg debate. Typically, as a technical matter, the seller pays; but where, after all, does the seller get the money from?

Answer: The seller gets the money to pay the real estate agent’s fee form the money the buyer brings! The important question is, not who provides the fee, but in whose interest is the broker working. Probably the clearest way to explain where the fee comes from is simply to say: from the proceeds of the sale.

Buyer Protects Fee

Although the seller usually pays the buyer broker’s fee, either through an interagency commision-split offered by the listing agency or else as a direct seller’s contribution written into the purchase & sale contract, nonetheless it is the buyer’s responsibility to protect his or her agent’s fee by doing nothing to jeopardize the buyer agent’s ability to collect. Specifically, once you have entered into an exclusive right to represent buyer agreement, you should never call another real estate agent without the knowledge of your own broker, and never view a property — other than an open house — without your broker. If you do view an open house, let your agent know, preferably in advance, and tell the agent at the open house that you are represented, and refer all questions to your agent.

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