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Who Pays for Your Buyer’s Agent?

buyers-agentBuyers are often confused about who pays for the buyer’s agent in the Bay Area, and this holds many back from hiring an agent in the first place. To answer this question, it is first important to understand how real estate commissions work.

Real estate agents work for a broker, and all fees paid to the agent will first pass through their broker. Only real estate brokers actually pay the commission. New agents may receive just 30-40% of the commission received by the brokerage, with other fees deducted. Top producing real estate agents may get 100% of the commission and just pay the broker a desk fee.

Who Pays the Buyer’s Agent?

who-pays-the-buyers-agentWhen you hire a buyer’s agent and sign a contract in the Bay Area, you will be represented by the agent and his or her brokerage. The fees paid to the brokerage, and the agent, will most likely be paid by the seller. In some cases, a cooperating listing agent will offer to pay the broker a percentage of the sales price. If the brokerage operates at a higher fee, the buyer may pay the difference.

The listing agreement between the seller and the seller’s agent typically specifies how much the listing brokerage will pay the selling brokerage for bringing a buyer. This means the seller will basically pay your buyer’s agent in the Bay Area to negotiate on your behalf.

In some cases, you may need to pay your agent directly, such as when there is no commission offered if the property is a For Sale by Owner. In most cases, though, the seller pays the commission to the listing brokerage, which then divides it with the buyer’s agent in the Bay Area.