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Who Pays the Realtor's Fee When Selling a Home?

written by: Valerie Tandoi•edited by: John Garger•updated: 2/26/2011

Is the realtor's fee usually paid by the home seller? Many first time home buyers may be unclear about the answer to this question.

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    Who Pays the Realtor?

    realtor Figuring out how much money you need for closing costs is a primary concern for most home buyers. The short answer to the question of who pays the realtor is that the realtor's fee is usually paid by the home seller. This is due to the fact that the seller is the one who hires the listing agent to help move the property.

    The listing agent's goal is to market the seller's property. The listing agent performs tasks such as holding open houses, placing ads and responding to Internet leads. It would be unfair to make the buyer pay for these services since the seller is the one who is benefiting from these tasks.

    Some people argue that technically the buyer is paying the realtor since the realtor's commission is usually a factor used in setting the sales price for a home. Although that point is valid, when it comes down to the nitty gritty, the seller is responsible to pay the listing agent's commission at the closing table.

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    Can the Buyer Have an Agent? Does the Buyer have to Pay?

    A buyer can choose to hire a buyer's agent. Although a buyer could go around looking for homes on his/her own, it can be very helpful to be represented by a buyer's agent, especially for first time home buyers. Buyer's agents are experts in the markets in which they work; they know the market much better than someone who is just moving to the area.

    Moving is also a busy time. A buyer's agent can do tasks such as calling listing agents to make viewing appointments, emailing or calling the buyer when they spot a property that meets the buyer's needs and going with the buyer to view different homes in a neighborhood. All realtors take an oath to treat all parties fairly during a real estate transaction.

    However, many buyers are still nervous that if something does go wrong during the transaction, they will be left helpless while the seller has the listing agent available to educate them. Having a buyer's agent can make home buyers feel like they have a friend in their corner. Even in this scenario, the commission for the buyer's agent still usually falls into the column of what the seller is responsible for at the closing table.

    The only time you may end up seeing the fee for the buyer's agent showing up in the buyer's column is if the buyer is purchasing a For Sale By Owner property. If someone finds him/herself interested in a For Sale By Owner home, it is always best to speak with a buyer's agent or real estate lawyer before agreeing to anything.

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    Always Remember

    Always remember that even though the realtor's fee is usually paid by the home seller, technically only a real estate broker can pay a real estate agent. The seller brings a cashier's check to the closing for closing costs and from that check the real estate broker at the firm where the agent works gets the money and pays the realtor his/her commission. Neither the buyer or seller should ever compensate a realtor directly by handing him/her cash or any other compensation. It is illegal for a realtor to accept payment this way.

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    Resources

    Ron Howard & Associates: Who Pays the Realtor?- http://www.livebaltimorecity.com/Blog/Who-Pays-the-Realtor

    Everything RE: Different Types of Agents- http://www.everythingre.com/Listing_Agents_versus_Selling_Agents

    Image Credit: Free Digital Photos