Real estate agents get paid through a real estate professional fee, which comes from the sale and/or purchase of a piece of property. But, who pays the this fee, the buyer or seller or both? Is using a realtor to buy a house free to the buyers? These are common questions among first-time buyers and sellers.
An average real estate professional fee is six percent of the sale price of the property, but this amount can vary depending on the agent representing the seller, the price of the property and other factors. So, if a home sells for $200,000, a six percent fee would be $12,000, which is taken out of the seller’s proceeds after the sale. The percentage fee is written into the seller’s agreement with their realtor, and is then divided between the buyer and seller’s agents.
In a traditional home buying transaction, buyers do not pay their realtor for services. The seller is responsible for paying the full real estate professional fee amount. But, why should a buyer’s agent get a piece of the fee? Well, a buyer’s agent may likely be the reason a home sells, because without the buyer, the property could still be on the market. The buyer’s agent is responsible for finding properties that fit the buyer’s criteria, scheduling appointments to see properties and then taking the necessary time to show those properties and getting any questions answered. Once a buyer finds a property they want, the agent is responsible for helping get an offer accepted and the paperwork organized to have a successful closing. A lot of time goes into research, planning and organizing everything a buyer needs to find and ultimately move into a new home.
In some cases, the buyer’s agent may also be the same person as the seller’s agent, and this is called dual agency. This is not a common situation, but it does happen when an agent has a listing that their buyer wants to purchase. In Indiana, realtors are required to disclose if they’re representing both parties, and many times the professional fee will be lowered since the same agent is working on behalf of both parties.
The real estate professional fee is separate from closing costs, and in many cases can also be the most expensive fee throughout the transaction. This fee covers the time the realtors spent bringing the sale together, organizing the paperwork for closing and the time setting up showings, negotiating the sale and other intangible services. The closing costs cover hard expenses such as loan processing, title company fees, insurance, HOA fees (if necessary) and any other related costs, such as a survey.
Whereas the seller typically pays the real estate professional fee, the buyer traditionally pays closing costs. This is not always the case, and some agreements may share the expense of closing costs, but the majority share is usually paid by the buyer. As with any real estate transaction, determining who pays how much can be negotiated.
With any real estate transaction, it is important to talk to a licensed and experienced real estate agent. These professionals can answer questions about fees, prices, trends and negotiate to get their client the best deal.