How Does a Buyer's Agent Get Paid?

How Does a Buyer's Agent Get Paid?

How Commission Works

Hi, my name is John Peña, and my name is Alejandro. Thank you so much for checking out this video. This video is for new buyers who have come into our world, and one of the questions we get asked all the time is about commission. How does a buyer's agent get paid? We're going to tell you exactly how a buyer's agent gets paid.

When you purchase a home, the seller has already made an agreement with their real estate agent about what the total commission is going to be on the sale of that home. It's typically 6%. So let's use a really simple example. If a seller is selling a home for $200,000, when that home closes, 6% of $200,000, which is $12,000, is going to go to the real estate agents. Typically it gets split, so 3%, or $6,000, is going to go to the real estate agent who represented the seller, and that other 3%, or $6,000, is going to go to the real estate agent who represented the buyer.

Now, you do not pay the commission out of your pocket. It's very important that you understand that was your $200,000, and out of that $200,000, $6,000 went to the listing agent and $6,000 went to us. So indirectly, yes, you do pay the commission, but it's not an additional sum. If you get under contract on that home and you agree to pay $200,000, the commission for both sides is included in that price.

What a Buyer's Agent Typically Charges

So for a buyer's agent, what's the typical real estate commission? It's going to be 3%. We stand by that, because what's happening in the market right now is that many sellers, and many real estate agents who represent sellers, are doing it for less than 6%. We've seen 5%. And sometimes what happens is that the seller's agent will keep 3% but only offer 2% to the buyer's agent.

If that were the case, you as the buyer would be responsible for paying that additional 1% commission out of pocket at closing, to us as your real estate agent.

Why We Don't Discount

We do not discount our 3% buyer's commission. The reason we don't discount our commission is because when you go to the doctor, you pay what the doctor tells you their fee is. If you hire a lawyer, you pay that lawyer what their fee is. And we provide a very high level of care and service for buyers. We go above and beyond for you. Trust us, that money will be well worth it to hire the best real estate agents to take care of everything, because a bad real estate agent is going to cost you a lot more money than you can even imagine.

So we wanted to explain commission. Most of the time, the commission is going to be 3% for the buyer's agent. If we show you a home and the commission is less than 3%, we'll tell you that upfront: hey, this agent is only offering two and a half. That's something we can talk about. But the main point is that yes, your real estate agent is going to get paid, but they're going to get paid indirectly, from the proceeds of the sale.