Real Estate Basics: Who Pays the Realtor?

Real Estate Basics: Who Pays the Realtor?

A question that some people don’t like to bring up is “who pays the realtor?” While it’s common in our culture to feel awkward about topics like this, no one should be afraid to speak frankly about money, especially when a house might be the most expensive item you’ll ever buy. I’ll explain how it works.

Typically each transaction has a Buyers Agent and a Sellers Agent. When a seller signs a contract with their agent to sell their house, they agree to pay the agent a commission based on a percentage of the final sale price. The most common arrangement is for the seller’s agent to split their commission with the buyer’s agent for bringing the buyer to the transaction.

So in this case let’s say the seller and their agent agree on a 6% commission. The selling agent then lists and markets the property to buyers and other agents, noting that they will split the commission 50/50 with the other agent who works with the buyer. In this case that would result in 3% to each agent, paid out of the seller’s proceeds. In this case the buyer doesn’t pay anything for the services of their agent.

Occasionally a seller with make a different arrangement with their realtor and in that case the buyer’s agent’s commission will need to be negotiated separately.

An important note: In Oregon it is legal for a single agent to represent both the buyer and seller, but the ethics of that can be questionable. It’s something like having the same lawyer represent both the prosecution and defense in a trial. One person has confidential information from both parties and may not be able to represent both of them fairly. It’s always a good idea to get your own representation.

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