Who Pays the Buyer's Agent Commission?

In a real estate transaction, both the seller and the buyer can employ a real estate agent to help manage the process. Buyers' agents earn commissions just as sellers' agents do, but the question of who actually pays the buyer's agent is not easy to answer since the commission comes out of the final sale price, which the agent negotiates and affects.

The Buyer Pays

On a basic level, home buyers pay their agents commissions, along with commissions for sellers' agents. The buyer is the only person who brings money into the transaction, usually in the form of a mortgage loan. The amount that the buyer pays to close the transaction is the gross sale amount, representing the full value of the offer that the seller accepts. A portion of this money compensates the buyer's agent. A buyer who negotiates without an agent can sometimes pay a lower overall price, since there is no buyer's agent to compensate.

The Seller Pays

From another perspective, the seller in a real estate transaction pays the buyer's agent. The seller accepts an offer, which is the gross sale amount, but never actually receives this full amount. Instead the buyer's agent can adjust his commission, as does the seller's agent, before submitting the net sale amount to the seller. Sellers have the option of asking for higher prices to make up for the money they'll never receive due to agent commissions.

The Seller's Agent Pays

In some cases, the seller's agent pays the buyer's agent. This occurs when the sale agreement specifies that the two agents will share a single commission. When this type of real estate deal closes, the seller's agent receives the full amount of her commission before sending the net sale amount to the seller. The seller's agent must then pay the buyer's agent from the full commission amount. Sellers' agents who agree to split commissions usually do so because a buyer's agent makes the sale possible or allows the seller to receive a higher offer than would be acceptable if the buyer had no agent.

The Buyer's Agent Pays

Buyers' agents may pay part of their commissions back to the buyers they work with in the form of rebates. This can happen when the buyer does much of the work alone but employs an agent at the last minute to seal the deal or help negotiate a price on a home that the buyer picked himself. Buyers' agents may also offer commission rebates on high-priced transactions, since the agent's percentage-based commission will still be enough to profit. When a buyer's agent offers a rebate, she pays the buyer out of the commission she receives from the seller's agent, or directly from the gross sale amount if there is no seller's agent.