If you’ve sold real estate you know that you pay a commission to your listing agent. But who pays the commission to the buyer’s agent? It can depend, but usually the seller. Here’s the low down on how to figure out who pays.

The easiest to understand is this, a listing agent works for the seller and the seller pays their commission. An agent must work for a real estate broker and the broker is the only one authorized to enter into a listing agreement. Think of it like the agent works for a company. The commissions are paid to the company and the agent gets paid by the company. Of course, that makes little difference to what is paid by whom. Generally, the seller pays all of the commissions.

A seller’s agent is someone hired by the home seller to assist with selling their home. The homeowner signs an agreement called a listing agreement. That agreement means that the broker has the exclusive right to list the home for a specific amount of time for a specific percentage of the sales price of the home.

A buyer’s agent works with people looking to buy a home. There is usually no written agreement, and the buyer’s agent shares the commission paid for the sale of the home with the listing agent. How the commission is divided will depend on several things. First, if both agents are in the same brokerage, the broker figures the split. If not, there really aren’t rules, but the listing agent will come out with a higher percentage of the commission than the seller.

What doesn’t change is who pays the commission. That is almost always the seller. Now, that’s not to say it can’t become part of any negotiations, but normally the seller pays it all.
Why? Because the commission is generally included in the sale price of the house. At the closing, payments will be made out of the funds from the sale for various things, including the commission.

So, if you’re the seller, you’re the paying party.