Buyers don’t usually directly pay commissions to their agents – even though the buyer’s agent works hard on their behalf and adds great value. Sellers often pay a total commission to the listing agent’s brokerage, which often splits it with the cooperating buyer’s brokerage, which pays the buyer’s agent. Even though the buyer agent commission comes from the seller’s proceeds, the buyer’s agent has a fiduciary responsibility to represent only the buyer’s best interests in the transaction!
Sellers are free to choose the amount of commissions paid to their listing brokerage and offer concession money to the buyer, which can be used to pay the buyer’s brokerage. Sellers often consider 2.5% and the optimal amount to attract the biggest pool of buyers to their listing, maximizing the selling price.
Doing a great job of representing a buyer takes lots of time and work, and only pays off for the agent if and when a sale closes. Buyers are now required to sign a “Buyer Representation Agreement” before touring properties with their agent. It confirms in writing the agent’s fiduciary duty to work only in the buyer’s best interest, and the buyer’s commitment to get their agent paid for working hard create the best outcome for the buyer!