By Living Room Realty, June 9, 2021
It is not uncommon for a buyer or seller to be confused about real estate agent fees, who pays them, and when. Let’s find out:
Who pays the commissions?
For homebuyers, you will luckily not need to pay either agent. The seller pays both the listing agent and the buyer’s agent at the settlement table. It comes out of the seller’s sale proceeds. The seller pays a fee to the listing agent (who represents the seller) and the listing agent, then, shares part of it with the agent who brings the buyer.
How much is it?
The commission paid to the real estate agents is a percentage of the price the home sells for. The amount of the commission, then, is determined by the sale price, but is typically around 6%. For a $500,000 home, for example, the real estate commission would be $30,000 at 6%.
What are closing costs?
Closing costs are the various fees that must be paid at closing, not including real estate agent fees. Included in the closing costs are:
- Loan processing fees
- Title company fees
- Fee to record the real estate deed
- Insurance
- Prorated taxes
- Homeowners association fees
The cost of these fees varies with each home. They can range from 2%-7% of the home’s purchase price. Your lender will provide you an estimate of closing costs with a detailed layout of each item.
When thinking of buying a home, make sure you take into account these additional fees and costs, so that you’re not surprised later on.
