One of the most common questions I hear is also one of the most misunderstood. How does my agent get paid, and will it cost me extra? The short answer: every commission is a negotiated agreement, not a fixed fee. It is agreed on in writing before you sign anything, and it is no longer set or advertised through the MLS.
For years, the way most people heard it was simple: the seller pays the listing agent, and the listing agent shares a portion with the buyer's agent. That changed with the National Association of Realtors settlement. Buyer-agent compensation can no longer be published through the MLS, and sellers no longer automatically pay a set buyer-agent commission. Instead, each side's compensation is negotiated separately and directly.
On the buyer's side, you and your agent typically agree on compensation in a written buyer representation agreement before you start looking. The seller may agree to cover some or all of it as a concession in your offer, but they are not required to, and the amount is part of the negotiation. If the seller does not cover it, you pay your agent directly. Either way, the dollar amount is agreed on up front, so there are no surprises at closing.
Buyers do pay real costs at closing: lender fees, title and escrow services, recording fees, and prepaid taxes and insurance. Many buyers also ask sellers to contribute toward closing costs as part of the offer. That is a normal and frequent negotiation, and it is a place where an agent's market knowledge pays for itself.
For sellers, the listing agent's commission is negotiated in your listing agreement and comes out of the sale proceeds at closing. It covers the marketing, the professional photos, the showings, the negotiation, and the risk management of a legally complicated transaction. In that same agreement you decide whether, and how much, you are willing to contribute toward the buyer's agent compensation. Selling without an agent to save the commission is a strategy with real costs of its own, which I break down in the do I need an agent article.
Whatever side of the table you sit on, my commitment is the same: every fee explained in plain English before you sign, no surprises at closing, and a negotiation that protects your bottom line. And one more time, because it matters: every commission is a negotiated agreement between you and your agent, not a fixed fee set by anyone else.
Want to see how it plays out for your specific situation? Let's talk and I will walk you through the numbers.
Angie Rivers, The Ralston Team
A Phoenix-area realtor who treats home buying and selling like a family affair: listen first, advocate fiercely, stay in your corner long after closing.
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