FAQ: How Does A Buyer’s Agent Get Paid?

Many times, when I am meeting buyers, they are confused about who pays their Realtor.  Many people are concerned that they will have to pay their Realtor, so instead, they call listing agents thinking that they will save money.

That is a myth.  Buyer’s Agents are almost always paid by the seller.  Even at new construction sites, the builder pays the agent’s commission.  

Many buyers will go to a new home community in search of a brand new home without Realtor representation.  They often think they will get a better deal if they leave their Realtor behind.  This is another myth.  In most cases, buyers are able to procure a much better deal WITH Realtor representation and most builders would rather that the buyer have a Realtor working on their behalf.

For Sale By Owners (FSBO’s) can sometimes be tricky.  Many times, sellers try to sell their home without the help of a Realtor because they think they can handle the legal documents on their own.  In some cases, FSBO’s will offer what’s called a coop to the buyer’s agent but many times they do not.  In this case, the buyer may be responsible to compensate their Realtor for representation.  And typically, the Buyer’s Agent ends up doing all of the work for both sides of the transaction since FSBO’s are NOT experts in the real estate industry. 

It is not a good idea to try to purchase a FSBO without the help of a licensed Realtor.  First, does the seller really know what their home is worth?  Will you be over-paying for the FSBO home?  Second, without the proper approved real estate contracts, are you exposing yourself legally by proceeding with this transaction?  Remember – approved real estate contracts are written to favor the buyer in all cases – not the seller.

Working with the Listing Agent to Purchase a Home.  Many buyers think that they will receive a better deal if they work solely with the listing agent on a home purchase.  Another MYTH! First, remember that the listing agent is working on behalf of the seller.  Second, the listing agreement the listing agent has with the seller is between them.  Just because you decide to forgo representation via a buyer’s agent does not mean that the seller is going to save thousands of dollars in commissions.  Instead, the listing agent is going to make more commission.  There are times when the listing agent offers to reduce their commission when they “bring the buyer”, but that is not a guarantee. 

If you are still confused about compensation for a Realtor working on your behalf, don’t be afraid to clarify this issue with your Realtor.  They can explain it clearly so there is never a doubt about your monetary responsibilities.