DO BUYERS PAY REALTOR FEES? | THE COMMISSION BREAKDOWN
Believe it or not, we get asked this question quite often, especially from first time home buyers. And the short answer is no, as a buyer you don’t pay a Realtor commissions. The longer answer? Well it all depends on the situation. Before we dive in on what exactly that means, first let’s discuss how real estate agents are paid.
HOW REAL ESTATE AGENTS ARE PAID
Real estate agents actually get paid directly through their broker, not the seller or buyer. Also, their commission isn’t earned unless the property closes and the file funds, meaning the transaction is complete; which typically takes roughly 30 days to close on a house.
Traditionally speaking, the sellers broker charges a certain percentage of the sales price, and a portion of that is what is paid to the buyers agent. Although there is no set standard for what a sellers broker charges in commissions to the seller, in Houston it’s common to see 6% in commission fees charged to the seller, and half (3%) goes to the buyer’s broker.
SO WHAT IS THE LONG ANSWER?
It all depends on the agent or broker you hire. Most agents like to have a buyers representation agreement signed before they commit to someone who is looking to buy a home in Houston. The reason being, if an agent commits to you, they want you to share that same commitment to them.
The buyers representation agreement will state how much in commissions the agent expects to receive from the sale. If for whatever reason, the sellers agent is compensating your agent less than agreed upon, your agent could ask you to come up with the difference. But don’t panic! These are very rare circumstances, and you will have better luck winning $1,000 from a scratch off ticket.
SO WHAT SHOULD YOU PLAN FOR?
For now, just worry about your down payment and closing costs when buying a house in Houston. Talk with your lender, agent, or give us a call if you have additional questions.
Be sure to check out an article we wrote discussing closing costs as a buyer, and what the minimum down payments are for each type of loan.
Also, check out another article for your reference about the loan process from a trusted mortgage company we use here.