Buying a home is not like buying a dollhouse for your kid in exchange for cash. It’s a long process starting from listing the property and ends with potential buyers sitting at a table to sign a final contract. Some agents specialize in bringing buyers to the table while some specialize in bringing the sellers. These agents make money through commissions. The abbreviation “BAC” stands for Buyer’s Agent commission. It’s the sale commission earned by the agent for representing a buyer in a Real Estate transaction.

How Much Is The Buyer Agent’s Commission?

The seller determines the commission and specifies it in the listing agreement. In most cases, the terms and amounts are also specified if the property is listed on MLS. On average the real estate commission ranges from 5%-6% of the house value. The majority of agents split this amount. 50% goes to the buyer's agent's commission and the listing agent keeps the rest 50%.

Who Pays The Buyer Agent Commission?

Technically, the seller pays the buyer agent’s commission. When determining the price of the property, the seller bakes the 6% commission fee in the home price. This commission gets split between the buyer and the seller's agent. The funds get delivered from the seller's account creating an illusion that the sellers pay it. 

While the truth is the buyer is the only one paying at the closing table. The commission amount for the buyer’s agent might pass on by the seller but it comes from the amount the buyer paid for the house.

Can Sellers Negotiate The Buyer’s Agent Fee?

There is no fixed rate of the commission, so yes you can negotiate the buyer agent commission especially if you are an FSBO seller, your property is not listed with a broker or on MLS. Hence you are not obligated to pay anyone.

But lowering the commission of the buyer’s agent won’t work best for you. Consider the following scenario: you, as a listing agent, bid 2.5 percent of the commission to the buyer's agent, while another listing agent offers 3.5 percent. What makes you think the buyer's agents would be more motivated to bring you a buyer? Secondly, the marketing budget and other service costs for the home sale are covered by the agent's fee. Your agent will be unable to adequately advertise your home if you have a limited budget. It’s important to think about the value you will be receiving by paying more.

Do You Have To Pay A Commission If You Don’t Buy A Home?

If you buy a home or not, you won't have to pay an agent fee because the commission is normally paid by the seller. However, bear in mind that real estate agents are paid at the end of the process, so if you change your mind after touring a few houses, the agent will not be compensated for their time.

Dual Agency

The term ""dual agency"" refers to when the same agent represents both the buyer and the seller. Since she/he is the agent for both buyer and the seller, the agent will receive the whole fee and will not be obligated to share it with anyone.

A dual agency is only considered legal if the agent provides full disclosure and obtains informed consent from both parties. However, it is completely illegal in several states such as Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, and Vermont.