Who Pays the Real Estate Commission?

Let’s break down how real estate commissions work and what’s changed in 2024 to give you a clearer picture of where the money goes during a transaction.

Who Pays the Commission?

Traditionally, sellers covered both the listing agent’s and the buyer’s agent’s fees. However, as of August 17, 2024, due to changes from the National Association of Realtors® settlement, buyers are now responsible for compensating their own agent. That said, sellers can still offer to cover the buyer’s agent commission as a way to attract more offers, sell at a higher price, or expedite the sale. Offering this can make a property more appealing compared to homes where buyers are footing the bill for their agent's fees. 
Why Offer to Cover the Buyer’s Agent Fee?

• Attract More Buyers: Covering the buyer’s agent fee increases your property’s appeal to a larger pool of potential buyers.
• Higher Selling Price: Without the burden of their agent’s commission, buyers are often willing to offer more.
• Faster Sale: Properties offering commission incentives tend to sell faster, reducing time on the market.
• Smoother Process: Buyers working with experienced agents tend to navigate the transaction process—like inspections and appraisals—more smoothly, avoiding potential delays or mistakes.

Do You Have to Pay a Commission?

While some homeowners choose to go the "For Sale By Owner" route, working with a Realtor® offers many benefits. An agent will handle everything from pricing your home to marketing, negotiating, and managing the paperwork, ensuring a smoother, less stressful sale process. Plus, their experience in getting the best price and terms often justifies the commission.

Negotiating Commission Fees

Real estate commission rates can vary, and they’re negotiable. Sellers can ask their agent for a reduced rate, but keep in mind that lower commissions may result in reduced marketing efforts, which can affect the visibility and sale price of your home. As a seller, you want a real estate agent who can broker the best sales price and terms for you, but good agents aren’t cheap. As with most things in life, you get what you pay for.  

Dual Agency

It’s not a common situation in real estate, but if the agent you’ve hired to represent you also represents the seller of the house you’re buying, it’s called dual agency. Also known as transaction brokers, dual agents represent the interests of both the buyer and the seller.  

In summary, real estate commissions may seem complicated, but understanding how they work is key to navigating the home buying or selling process. Working with a skilled agent, whether you’re paying their commission or not, can make all the difference in getting the best results.