The Real McCoy: How much does the homebuyer pay the agent?

By: Kari McCoy, Special to the Telegraph
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Dear Kari, I am looking to buy my first house and I have all the information on the loan costs and fees. How much can I expect to pay a Realtor? Answer: This is a great question and one that is often confusing. Under normal circumstances, the seller pays both the listing and selling agents’ commissions. A real estate agent gets paid by the seller and does not get paid by the buyer. This occurs approximately 98 percent of the time. When an agent lists a home for sale, they have an agreement with the seller that they will list the home for a predetermined commission. If you have your own agent representing you, then the Realtors split the commission. Residential real estate agents only get paid when the house sells and changes title with the new owner, not when the a home is listed. Real estate agents basically run their own businesses and are responsible for their own survival. There are no salaries, bonuses, expense accounts, insurance or special accounts for retirement. They only get paid a commission when the transaction closes. There are a couple of ways in which this commission is created. Some real estate companies require the agent to pay a company a “desk fee,” which is similar to rent. They also pay an annual fee to be a part of the brokerage that allows them use of office space and for them to have a desk. This situation usually offers a higher commission split between the Realtor and the broker. Another option is the Realtor does not pay a desk fee, yet gives a higher percentage of their commission to the broker. So the Realtor would not have to pay for the office and desk fee by giving up a larger portion of each completed transaction. It all depends on the firm’s general commission policies. When an agent lists a home for a potential seller, they have a duty to the seller to obtain the highest offer for that client. When you have your own agent representing you in purchasing a home, they have a duty to you to negotiate the best transaction they can in your favor. Since this is not costing you anything, it’s one of the best services you get for free. Once you find a property, you want to make an offer with your own agent, who will look at the other homes that have sold recently in the area. It is best to make sure you are not offering too much on a property. Remember, just because a seller is asking a certain price does not mean that is what the home is worth in the current market. Your Realtor is going to negotiate the best results for you without any extra costs. You get all of the benefits without any of the fees.  Almost all newly-constructed subdivisions, in today’s market, are offering your buyer’s Realtor a full commission, but the secret to know is that a buyer and their Realtor must go to the model office on the initial visit. Your Realtor and you must fill out a special card stating that this is your agent acting on your behalf. If your Realtor does not come with you on the initial visit, you will be denied the right to have your Realtor represent you and negotiate for you. So as soon as you see a subdivision, be sure to resist the urge to “take a peek,” even if you do not give out your name and do not sign anything. If the sales person at the model happens to remember you the next time you arrive with your Realtor, the builder has the right to say no to your Realtor.  Kari McCoy owns the Kari McCoy Group, residential real estate at Lyon and can be reached at (916) 941-9540 or e-mail