How buyers real estate agents get paid is a common question. It’s an ongoing source of mis-information and confusion. And the by-product is that a large number of buyers don’t get their own real estate agent because they think it’s going to cost them more money to be represented.
So let’s set the record straight about how buyers real estate agents get paid. First of all, buyers real estate agents only get paid if you buy a home and use them to do it. This is important because all of those agents running around doing searches for buyers are working for free until you close on the purchase of your home. This begs the question why do buyers agents work for free? We do until you find something you love. Then our fees are paid by the seller.
Typically, buyers don’t pay to be represented by a buyers real estate agent. The agents of buyers are compensated from the commission the seller agrees to pay their listing agent to get the home sold.
- The seller contracts an agent (company) to list their house and agrees to pay them X amount from their bottom line at closing when it sells.
- That amount is divided between the seller’s agency and the buyer’s agency (if there is one; if not, the seller’s agency usually keeps the full amount.
- The agencies keep a portion and pay a portion to their real estate agent.
In essence, the buyers agency is paid a portion of the commission, like a finders fee, for bringing a buyer the home and helping unload this inventory.
One of the many benefits of having a buyers real estate agent is that they are there to facilitate the buyers side of the arrangement. There is rarely a discount given on the price for a non-represented buyer. And what’s more, with the seller’s agent under contract to get the seller the most money for the sale of their home, how can they recommend you offer anything less than exactly what their seller is asking for, right?
Remember: in the end, the only way a buyers real estate agent gets paid is if you find, love and buy home.
I’m here to help, be an educational resource and guide you through the initial process and help you find something that you fall in love with.
PLEASE NOTE: As with all rules, there are some exceptions to this. This, for example, does not apply to situations where the seller does not have an agent and is not honoring a commission, or if the listing agent is not offering any commission/fee to a buyer’s agent. If that is the case, the buyer’s real estate agent may require you to complete a “buyer-broker agreement,” which means you will be charged a pre-agreed amount at closing on top of your closing fees. Alternatively, you may have an exclusive “buyer-broker agreement” executed to work with a particular agent at a certain rate and if the home you buy is offering a lesser-amount commission, you will be charged the difference at closing between what the seller/seller’s agent is offering and what you’ve contracted with your buyer’s real estate agent.