Who Pays the Real Estate Agent Commission?

Who Pays the Real Estate Agent Commission?
Who Pays the Real Estate Agent Commission?

Buying or selling a property is a very complex process. Within the equation is the figure of the real estate agent, although not in an essential way, but vital for a smooth process. Many owners or those interested in a property integrated into the real estate market doubt hiring a real estate broker due to the lack of knowledge about their fees. Who pays the commission: the buyer or the seller?

This is a question that clients usually ask themselves, whether they want to sell, buy or rent a property. The complement and advice of a real estate agent are worth every dollar of the commission. It doesn’t matter if you are selling, renting, or buying real estate; make sure you are working with an agent who has the knowledge, experience, and equipment necessary to give you the advice you need.

Real estate agents do not receive a salary; they are only compensated for their work if the sale or rental of the property is achieved. Therefore, the commission is charged once the buyer or tenant pays. There are certain exceptions, such as in the case of new constructions with a completion time of more than 1 year, where partial commission payments can be made. This is something left to the builder’s decision.

According to a report by the Consumer Federation of America, more than half of Americans don’t know the average commission for real estate agents in their area. Commission pay for these experts varies from state to state as well as company to company. Thus, this article focuses on things you may need to learn about Cincinnati real estate agents‘ commissions.


What Is the Commission, and Who Pays That Commission?

It is the money that the real estate agent receives for his work. Generally, there are 2 real estate agents the one that represents the owner and the one that represents the buyer or tenant.

However, in the United States, the person who owns the property, that is, the seller, is the one who pays the commission, which comes from what the buyer or tenant pays. That is, the commission is taken from the money the owner receives.

Even if you are a buyer with a real estate agent, in most cases, the fee for both real estate brokers comes from the initial proposal the owner has had with his profession. This does not mean it is a rule since it depends on the contractual arrangements the buyer has had with his agent.

A real estate agent’s commission from the seller is a percentage subtracted from the house’s sale. For example, if the property is valued at $500,000 and since it was contracted, the agent indicates that he will take 5%, then $25,000 will be subtracted from the total sale, which is the payment for the broker’s services, and will leave the seller with $475,000 in total.


How Much Is the Commission?

In residential purchase/sale transactions, the commission is usually around 6% of the property’s sale value, and in the case of residential rentals, the commission is one month’s rent. In both cases, the commission is shared between the 2 agents; the common is 50% for each.

As mentioned, in most cases, the seller is the one who pays the commissions with part of the sale value of his property. If you are an owner who wants to put your home on the market, you must read your agent’s contract because the price of your sale and your profits depend on it.

If, in the previous example, you thought you would win $500,000, you should have completed the purchase-sale at around $527,000 to have the amount you expected free.


Where Does the Seller Pay the Real Estate Buyer’s Agent Commission?

It is from the commission that the broker receives from the seller. Once he receives his commission, the seller’s agent shares part of it with the buyer’s agent. Continuing with the same example, then, of the approximate $25,000 that the seller’s broker would receive, each would get about $12,500.


Where Is the Amount of the Commission Stipulated?

It is stipulated in the document called the listing agreement. This is an agreement between the seller and the real estate broker, where the commission percentage on the sale price is indicated and how it will be distributed among the real estate agents.


Does the Buyer or Tenant Pay a Commission?

There are exceptions where the buyer or tenant can pay part or all of the amount of the commission, for example, when you want a property in which the owner does not have the property listed with a real estate agent.


Should I Sell My Property Without a Real Estate Agent?

You could, but a recent survey found that the typical owner-only home sold for much less than an agent-assisted home sale, according to the National Association of Realtors. So you pretty much need a realtor’s services if you intend to get the right value for your property.

Take into account that real estate agents are professionals who are involved in all the details of the real estate market:

  • The appraisal of the property: An agent will seek to increase the highest competitive price so that both he and the buyer have a good profit margin.
  • The promotion: The agent will be dedicated 24/7 to publicizing the property on social networks and any means at hand.
  • The buying-selling process: The realtor knows all the mechanisms that both the buyer and the owner must comply with to make an offer. They can even advise you on the subject of taxes.

A realtor’s services are essential in order to have a smooth and hurdle-free property sale and acquisition. However, finding a realtor with good reviews and reputations for being the best is challenging, especially if you want their services around Ohio and Kentucky. This is why we have researched top real estate agents in Cincinnati and recommend you use the services of Gibson and Terry’s Team.

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