The reality is that the commission is never a part of the buyer’s statement of adjustments, and therefore is NOT paid by the buyer. If we’re discussing things technically… On closing day, the buyer will receive a statement of adjustments that shows all of the debits and credits that result in an amount of funds required to close. Who Pays The Real Estate Agent When Purchasing? While sellers may be paying lesser commissions on the front end, discount brokers typically sell homes for less money due to a lower amount of exposure, marketing budget, and unwillingness of buyer’s to pay commissions. (unless waived by the buyer’s agent)īecause the expectation of most buyers is that they do not have to pay a commission, this can be a reason why discount broker represented houses consistently stay on the market for longer than average days on market. In this situation, should a buyer choose to write an offer on that property, they will have to compensate their agent’s brokerage for the agreed upon fee less the amount paid by the seller. If the seller chooses representation by a discount brokerage, this discount brokerage typically offers a significantly lower co-operating commission than the industry expectation. In this agreement, there is a stipulation that the buyer’s agent will receive a commission from the seller based on the industry expectation, and if the seller is offering less than the standard that the buyer will have to make up the difference. Most buyers that are working with a realtor will be under a buyer’s agency contract, in which they agree that they have a realtor working solely for them and in their best interests. Buyer Agency Agreements & Discount Brokerages At the time of writing a contract to purchase, the commissions are already pre-determined. Whereas, the contract of purchase and sale is an agreement on the sale of the property with regards to price, dates, and terms. The listing contract is solely signed by the seller, seller’s agent, and the seller’s brokerage, and the buyer has no signing authority or disclosure on the listing contract or gross commission. The listing contract and the contract of purchase and sale (agreement to purchase) are two entirely separate documents. When the home is first listed, the seller and realtor enter in to a listing agreement in which they agree to a gross commission, listing agent commission, and buyer agent commission. Real estate agents work for a brokerage, and all commissions are received by the brokerage.Īs a buyer, your expectation should be that when purchasing a property and having a real estate agent represent you in your purchase that you should not have to pay any real estate commission.Upon completion, the commissions are deducted from the seller’s statement of adjustments (profit) and the notary sends the funds to the real estate brokerage.The Listing Agent & Seller agree to a gross commission which is split between the seller’s agent and buyer’s agent.
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