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How Does A Buyer's Agent Get Paid?

Certified Mortgage Advisor
NMLS 1701021
August 25, 2019

How does a buyer's agent get paid?

So if you're looking at buying a house and you're going to work with a real estate agent, the buyer's agent is going to get paid by the seller. So you should not have to pay for your buyer's agent most of the time.

We're going to talk about a couple of different ways in which you might, and some things to look out for. Also, we're going to talk about what does a buyer's agent actually do for you and do you need them?

First of all, most of the time, the way a buyer's agent is going to get paid is through the seller.

Settlement statements

This is the document that shows the final credits and debits for both the seller and the buyer. And what normally happens is the seller is going to pay both realtors. They're going to pay their realtor and they're going to pay your realtor. So when you're purchasing a home, essentially your realtor costs nothing for you to work with them. Because the seller is going to be the one fronting the cost.

Can we lower the purchase price without a buyer's agent?

So the big thing that people question is whether it is possible to work without a buyer's agent so that you can lower the purchase price of the home you're looking at buying. So for instance, example, the real estate agent on the buyer side is getting $9,150, and so is the agent on the seller. So could the buyer work without a real estate agent and bring down the purchase price by $9,000? I'm sure that's something they could negotiate.

But one thing you have to keep in mind in working with a real estate agent is that your real estate agent works for you to make sure that you have all the protection and all of the legal contracts set up to make sure that the purchase goes smoothly.

Real estate agent's can be your guide with the process

There's so much that goes on in real estate and so many opportunities for you to lose your shirt in the process that I think it's unwise to go into a deal without working with a professional or someone who is experienced in real estate law to be able to help you navigate contracts and procedures that go on, especially when there are issues.

When there are issues like appraisals coming in at different values or problems with a home inspection, having a real estate agent. Who is experienced and knows what's happening next and how to solve problems is really going to help you have ease throughout the entire process the entire time it's gonna make it a more enjoyable experience where someone can guide you through the process, especially when there are hiccups, instead of not being sure what's going to come up next and tackling problems as they come up.

And it's probably going to be a little difficult if you don't use a real estate agent. So here are some cases in which you might actually have to pay your buyer's agent that I've seen happen.


Number one is if you are a buyer you're working with an agent and the house that you put an offer in is a FISBO or for sale by owner. For sale by owners, normally are a for sale by owner because they don't want to pay any realtor commissions. The problem is normally a buyer's agent makes money from the seller. So that's where you get a little bit of a conflict.

So if you're working with an agent on the buying side and you're looking at buying a for sale by owner home, you might have to negotiate. The realtor might have to negotiate, maybe getting some commission from the seller, or in some instances, I've seen realtors charge a small cost to the buyer. If they're looking for a sale by owner, something else that you might want to look out for is if the realtor is charging any sort of administration or processing or transaction fee along with it. This is pretty common for a lot of contracts that I've seen where.

A buyer's agent is working with a buyer

Most of their commission is going to get paid by the seller, but they might charge an administration, processing, or transaction fee. It's called different things. Sometimes it's 150 bucks. Sometimes it's 495. It can be wherever, but that real estate brokerage might charge a fee to the buyer on that side. So something to look out for.

It doesn't mean it's an agent that you want to know. Because you just have to evaluate the buyer's agent. That's going to keep your goals in mind in somebody who is going to be able to help navigate you through the next steps in the process, overcome hurdles and make sure that they find a house for you that you really enjoy and make the process enjoyable at the same time.

Buyer's agent adds protection to the buyer

So what does a buyer's agent do? What's the point of having buyers? It's not just somebody who's going to stand at a house with you while you will look around. That's not the point of a buyer's agent. They're not just there to keep you company while you're looking through homes.

The point of a buyer's agent really is to add legal protection for you. So buyer's agents are, so realtors are not lawyers by any means, but they are licensed and experienced in real estate law. So they're going to be able to help you navigate a purchase contract. That's going to spell out all of the terms and details of the home that you're purchasing so that you have legal protection all the way through and a really good real estate agent is going to give you outs in your contract.

And what I mean by outs is they're going to give you ways that you can set up contingencies in your offer so that if things go. You can jump out of the contract without legal consequences. That's the main benefit of a buyer's agent is they're giving you that added layer of protection because they're experienced in what they do and they've purchased, or they've probably bought and sold more homes. Then you probably have in your life so far.

Main benefit of buyers agent

So that's the main benefit of a buyer's agent is your legal protection and understanding of how to set up that contract to protect you during that contract and in the future, after you close, if there are any problems.

They will help you with the process

The second thing that a buyer's agent is really beneficial for is somebody who can walk you through the process. Even if this is your third time buying a home. The process changes and evolves as real estate grows and evolves itself.

Things are changing with processes, with laws, with the market, and it's really helpful to have somebody who's familiar with what's going on recently to be able to walk you through the next steps. That way, when something does come up, that's an issue. You have a guide who can help you through some of those next steps instead of sitting there and not knowing what to do.

Making the process seamless

So I've talked with, a lot of agents who have worked with buyers who are not working with a realtor and it always makes the transaction a lot more difficult because most of the time they have no clue what's going on. Even if you're really well experienced in real estate, you might not be experienced in the contract and procedural side of real estate. To make sure that everything works well on both sides.

For instance, I was talking with a realtor the other day who was listing a home. They had a buyer who wasn't working with the buyers. They're asking the buyer for some specific forms that they needed to fill out to be able to move the contract forward. And the buyer was saying I thought you would do that. And the listing agent is they can know that's what you were supposed to do. That's what the buyer side is supposed to do either you or a buyer's agent is going to be doing that for you.

You need that protection

You need somebody who can walk you through the legal procedures that go along with real estate. And then also from that emotional perspective, somebody who can guide you through the next step. So when you encounter problems, that way you can go through the home buying process safely and with ease.

So in short, who pays for by?

Most of the time it's the seller. You might have a small admin or processing costs for your buyer's agent as well, but it's going to be the seller picking up. Most of that cost. Having a buyer's agent really is going to help you move into a home with ease, security, and understanding.

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Kyle Andrew Seagraves is Federal Mortgage Loan Originator (NMLS 1701021) licensed in all 50 states with the Dan Frio Team at Allied First Bank (NMLS 203463), an Equal Housing Lender. Separately, Kyle owns Win The House You Love LLC, an education company. Win The House You Love LLC is not a lender, does not issue loan qualifications, and does not extend credit of any kind. This website is only for educational usage. All calculations should be verified independently. This website is not an offer to lend and should not directly be used to make decisions on home offers, purchasing decisions, nor loan selections. Not guaranteed to provide accurate results, imply lending terms, qualification amounts, nor real estate advice. Seek counsel from a licensed real estate agent, loan originator, financial planner, accountant, and/or attorney for real estate, legal, and/or financial advice.

Servbank is not affiliated with the VA, FHA or any other government agency. This site has not been approved by any government agency.
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