Do Buyers Pay Realtor Fees? (2024 Update)

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By Steve Nicastro Updated April 11, 2024


Buyers usually don't pay realtor fees (or commissions) in a real estate transaction. Nationwide, the average cost of a buyer's agent is 2.66% of a home's sale price, covered by the seller, according to Clever's average real estate commission rate survey.

The buyer's agent fee is typically included in the overall expenses of selling a home and gets subtracted from the home's final sale price during closing. This commission then gets distributed among the real estate agents involved in the transaction, with a common practice being a 50/50 split.

The tradition of sellers paying the buyer's agent fee traces back to the National Association of Realtors (NAR) Participation Agreement, which mandates that listing brokers offer compensation to buyer brokers.[1]

Although buyers aren't responsible for real estate agent fees, they should prepare for other significant out-of-pocket expenses, such as the down payment and, in most cases, earnest money and closing costs.

While paying the buyer's agent fee remains a standard practice, sellers can secure cost savings when listing their properties through Clever Real Estate, which offers reduced commission rates of 1.5% compared to the usual 2.5-3%. For buyers, a good way to save is to secure a buyer rebate or cash back at closing. 

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What do buyer real estate agent fees cover?

Real estate brokers charge a percentage of a home's final sale price to calculate commission payouts. For example, a house that sells for $400,000 with a commission rate of 6% would cost the seller $24,000 in commission. 

For the buyer's agent, the commission covers services rendered, such as:

  • Walking the buyer through the home purchase process and securing financing. 
  • Helping the buyer locate a home using the multiple listing service is the key method used to find homes, as 86% of all homes sell via the MLS.[2]
  • Scheduling showing times with the listing agent or seller and showing the homes.
  • Analyze comparable properties to determine fair market value for the home to guide the buyer's offer price. 
  • Negotiating with the listing agent and seller. 
  • Writing up the contract and processing all the paperwork

The total commission rate, averaging 5.49% of the sale price nationwide, is typically divided almost equally between the buyer's and seller's agents. The listing agent typically earns 2.83%, while the buyer's agent receives 2.66%, according to Clever's survey of more than 600 real estate agents. Over 70% of sellers nationwide report paying 5% or more of the sale price on their home sale.[3]

» Find average commission rates in your area

Why do sellers pay the buyer's agent (and should they)?

The seller pays the real estate fees for both agents, a practice that has been standard for many years. This practice is mandated by NAR, which requires listing brokers to offer compensation to brokers to list properties on the MLS.

However, this topic has been a subject of significant debate and scrutiny, with NAR facing several lawsuits that could potentially lead to changes in this system.[4]

Supporters argue that paying the buyer’s agent commission motivates agents to show properties, leading to quicker, more profitable sales. Selling with a low (or no) buyer’s agent commission can lead to properties staying on the market longer.

However, critics argue that this model is outdated and costly. It contributes to total agent fees reaching 6% of the home's sale price. Not having to pay the buyer's agent would hypothetically save sellers an average of 2.66% in commission nationwide (the current average buyer's rate), amounting to $10,650 in savings on a $400,000 home sale.

The current arrangement may also create a conflict of interest since the buyer's agent, paid by the seller, only owes a fiduciary duty to the buyer.

Why real estate commissions may be changing

Traditionally, home sellers have been responsible for paying the commission fees of both their and buyer's agents. However, a lawsuit against NAR challenged this practice, leading to a substantial settlement agreement.

The National Association of Realtors (NAR) recently agreed to settle by paying $418 million over the next four years without admitting guilt. This deal makes it easier for buyers and sellers to decide how they pay agents.

What does this mean for you? Well, it might lead to lower fees for the buyer's agent, and buyers might get to talk more about what those fees should be based on what services they need.

These changes are supposed to start in July 2024, but it's not set in stone yet. There could be some delays or changes, so we'll keep you posted on what it means to sell or buy a home.

Remember: You can negotiate realtor fees!

Even if big changes aren't coming immediately, you can save on realtor fees.

First, the typical 2-3% listing agent commission isn't set in stone. If you're selling, you can negotiate a lower commission rate before you sign anything. 

But let's be real: Negotiating isn't easy. One industry study found that just 22% of sellers brought up the topic with their agent and successfully negotiated a reduced commission or fee.[5]

That's where Clever Real Estate steps in. With us, no haggling is needed. We've done the hard work for you, securing great commission rates with top agents. Sell your home with Clever, and you're looking at a listing fee of just 1.5%.

💰 Secure a 1.5% listing fee without the hassle of negotiating.

Other big expenses facing home buyers

$400,000 home purchase example

Down payment (15%)$60,000
Earnest money (2%)$8,000
Closing costs (3%)$12,000
Total costs$80,000
Note: These are approximate figures based on typical costs of buying. Actual costs may vary depending on factors like the down payment amount, the specific home price, and the location.

When considering the financial burden of purchasing a home, proponents of sellers covering buyer's agent fees argue that buyers already face significant expenses. Here's a breakdown of the major costs involved.

Down payment

The most significant upfront cost for buyers is the down payment, which can vary widely and has risen slightly with rising home values. It typically falls between 3% and 20% of the home's purchase price. 

On average, the down payment is just under 15%, with a median cost of $30,000.[6] For a $400,000 home, the down payment would amount to $60,000. 

Also, remember that making a down payment of less than 20% often requires private mortgage insurance (PMI), though there are ways to avoid PMI on a mortgage.

Earnest money

Buyers usually provide earnest money before the closing date, which generally amounts to 1-5% of the home's price. A $400,000 house can cost between $4,000 to $12,000 or more. 

Remember that earnest money functions more like a deposit, and if the transaction successfully concludes, it gets applied to the buyer's purchase. It serves as a sign of the buyer's commitment to the seller, indicating their serious intent to purchase the property.

Closing costs

While buyers usually don't pay a commission to their agents, they're responsible for covering their own closing costs. These costs can vary depending on location, loan type, and interest rate. 

Buyer's closing costs typically include appraisal, inspections, loan underwriting, and attorney fees. 

As a general guideline, buyers should set aside between 2% and 5% of the purchase price to account for closing costs. A $400,000 property can range from $8,000 to $20,000.

Buyer closing costs: How to reduce the burden

There are several strategies to make buying closing costs more manageable.  

  1. Negotiate with the seller. It's common in real estate transactions for sellers to agree to contribute toward some or all closing costs, although this may vary by market and be less common in a market favoring sellers. This can significantly reduce the upfront costs required by the buyer.
  2. Roll closing costs into the loan. Buyers often can choose to include the closing costs in a mortgage loan. For instance, if you purchase a $250,000 home with $7,500 in closing costs, you can request a loan approval for $257,500 to cover both the home purchase and closing costs.
  3. Get a home buyer rebate. Some companies offer home buyer rebates, providing cash back at closing. These rebates can be a percentage of the home's final sale price. For example, Clever Real Estate matches you with local buyers' agents, and eligible buyers can qualify for cash back after closing.

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