Who Pays the Realtor When Selling a House?

Realtors take a percentage of all home sales.

Realtors take a percentage of all home sales.

Selling your house is a difficult task that can be made easier with the help of a Realtor. Realtors advertise, showcase and do their best to sell your home at the highest price to a qualified buyer. Once the sale takes place, it is time to pay the Realtor for services. Depending on the type of sale and the arrangements made, payment may come from a variety of sources.

The Seller

When selling a home, the owner will typically hire the real estate agent or company of his choice. In most cases, the Realtor and homeowner will sign an exclusive contract that grants the agency the sole right to sell the property. In this case, even if another agency or the homeowner were to sell the property, the exclusive agent would be entitled to the fees. The percentage due to the selling Realtor can vary and is open for negotiation at the time of the contract signing. The typical range is somewhere between 3 and 6 percent of the selling price.

Short Sales & Foreclosures

Short sales and foreclosures are different animals than the traditional real estate purchase, and as such, they have some different rules for both buyer and seller. In both cases, the Realtor is working for the bank that has repossessed the home and it is the bank that is liable for producing payment. The typical rate for a short sale or foreclosure sale is around 3.5 percent and the Realtor is only entitled to payment once the sale is made final, a process which can take several months thanks to the complexity of the paperwork and the legal processes involved in such a sale. In some cases, lenders may try to pass the Realtor cost on to the buyer, so as always, read your contracts carefully before signing anything.

Brokerage Fees

In recent years, brokers have developed new brokerage fees that are designed to cover the higher expenses of advertising and the longer amount of time spent on each home sale. These brokerage fees can be set at any amount and are at the discretion of the real estate company, but typically come in around the $500 mark. These fees are due both of the seller and the buyer in many cases. Read your contracts carefully and if you see something you don't like, like a brokerage fee, remember that everything is negotiable before you sign, but nothing is negotiable after you sign.

The Buyer

The buyer is typically spared the expense of traditional Realtor fees unless a special agreement is reached with the owner. In some cases, a buyer will offer to pay half or even all of the agency fees as a method of outbidding another buyer. This is a method of raising the amount that the seller receives without raising the price of the home, the mortgage and all the fees involved. It is rare to see such practices in a down market but when a property is hot and in serious demand, anything is possible.


About the Author

Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.

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