How Do Commissions Work?

Buyers don’t usually pay any commissions to their agents – even though their buyer’s agent works hard on their behalf.  The seller pays a total commission to the listing agent brokerage, which then typically splits it with the cooperating buyer’s brokerage, which pays the buyer’s agent.  Sellers choose the amount of commission promised to the buyer’s agent broker.  They often choose 2.5% to attract the biggest pool of buyers to their listing.

Even though the buyer agent commission comes from the seller’s proceeds, the buyer agent has a fiduciary responsibility to represent only the buyer’s best interests in the transaction.  

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.  That’s why it’s a good idea to sign a “buyer broker agreement” with your agent.   Confirming in writing your commitment to be represented by the agent that’s working hard for you makes for a strong and lasting partnership – and creates the best outcome for you, the buyer!

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