Buyer or Seller: Who Pays Real Estate Commissions?

Are you in the process of buying or selling a property and wondering who is responsible for paying real estate commissions? You're not alone! This is a common question among buyers and sellers alike. In...

Buyer or Seller: Who Pays Real Estate Commissions?

Are you in the process of buying or selling a property and wondering who is responsible for paying real estate commissions? You're not alone! This is a common question among buyers and sellers alike. In this article, we will provide you with the answers you're looking for.

Who Pays Real Estate Agent Fees?

In most states, including California and Texas, the seller is typically responsible for paying both the selling agent and listing agent commissions. These commissions are usually paid at closing, out of the proceeds of the sale. Real estate agents are typically paid based on a percentage of the sales price of each transaction they are involved in. Although the commission rates are not set by law, the industry standard is a 6% commission, split between the buying and selling agents.

To summarize, in the majority of cases, it is the sellers who pay the real estate agent commissions. However, it's important to note that there are variations in this structure, and the terms will ultimately depend on the contract in place.

It’s Written Into the Paperwork

When sellers sign their listing agreement, they typically agree to their agent's commission rate. Similarly, buyers will sign a similar agreement with their agent, which sets the terms with their agent. The contract terms can also negotiate who is responsible for paying the commissions. This is usually discussed in the purchase agreement, signed by both the buyer and seller.

What Do Buyer and Seller Agents Do for Their Clients?

Now that you know who pays the commissions, let's dive into what buyer and seller agents actually do to assist their clients throughout the real estate process.

The Listing Agent

The listing agent, also known as the seller's agent, is responsible for listing the home for sale and advertising it on the market. Their services include:

  • Establishing a list price based on market conditions
  • Listing the home on public websites and MLS
  • Reviewing offers from buyers and guiding sellers in evaluating them
  • Negotiating terms of the offers
  • Attending home inspections and appraisals on behalf of the seller
  • Ensuring all paperwork is completed for the closing process

The Buyer’s Agent

The buyer's agent plays a crucial role in helping buyers find their ideal home. Their tasks include:

  • Coaching clients on current market conditions
  • Assisting buyers in narrowing down their preferences
  • Providing listings that meet the buyer's criteria
  • Organizing property tours and educating buyers about the homes and neighborhoods
  • Advising buyers on offer terms based on market conditions and local sales
  • Presenting offers to the listing agent and seller
  • Negotiating with the seller to agree on a sale price
  • Attending home inspections and appraisals as the buyer's representative
  • Ensuring all deadlines are met and the loan stays on track for closing

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In conclusion, understanding who pays real estate commissions is crucial when buying or selling a property. In most cases, it is the sellers who bear the responsibility. However, the terms can vary and should be clearly outlined in the contract. Both buyer and seller agents play essential roles in guiding their clients through the real estate process and ensuring a successful transaction.

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