How REALTOR® Fees Are Paid

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Part of the home buying experience comes with many questions of how does this work or who pays for that? As a first-time home buyer, you may wonder if the buyer or seller or a combination of both parties will be paying the fees to the real estate agents. You’re not alone in asking this question. It is one of the most common questions asked. The answer lies in how real estate agent commissions work.

 

Commissions for REALTORS®

Each brokerage firm can vary in how they operate and in the percentage amount the broker compensates to each real estate agent. From the agent’s commission fees for signage, advertising, and office expense are deducted. For any brokerage firm these three items are fact:


  1. Agents are employed by a real estate broker.

  2. All fees paid to an agent passes through the broker.

  3. Only a real estate broker can pay a real estate commission and sign a listing agreement with a seller.

 

The most common type of listing agreement between a seller and real estate agent grants the agent’s broker exclusivity to market the property. In exchange for bringing a buyer to the agency, the seller agrees to pay a commission to the broker.

 

The Buyer Agent’s Commission

The named brokerage firm and real estate agent represent the buyer as outlined in the buyer’s broker arrangement. Typically, the fee paid to the broker is paid by the seller. The seller is then not obligated, under most listing agreements, to compensate the listing broker for more than the listing side or portion of the commission. However, our team ensures that our buyers do not have to pay agent commissions, unless in rare circumstances. Sellers can also credit the buyer the commission and the buyer, in turn, credits the brokerage.

 

Understanding Closing Costs

There will be costs for both buyers and sellers at the time of closing.

The Seller

The seller pays the commission as explained above and possibly the balance of their property taxes.

The Buyer

As you probably assumed there are additional costs for buyers. Besides the mortgage loan, buyers can anticipate fees such as: appraisal fee, origination fee, prepaid interest, prepaid insurance, flood certification fee, tax servicing fee, credit report fee, bank processing fee, recording fee, notary fee, title insurance, plus any applicable property specific fees.

 

Have questions or simply need a hand getting started? Reach out to Michelle Knobloch for answers.  


Michelle Knobloch brings a wealth of knowledge and expertise about buying and selling real estate around the Baton Rouge region to those she serves. Michelle is a multi-year award winning real estate listing specialist and CEO of Capital Homes Specialists where her clients trust her to have up-to-date information on the real estate market. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Baton Rouge and the surrounding parishes.