Who Pays the Realtor's Commission When I Buy a House?

   I am sometimes asked who pays my commission if a buyer wanted to hire me to represent them if they buy a house. Normal protocol in California is the seller's hired broker agrees to pay the buyer's hired broker a split of the commission that the seller has agreed to pay the listing broker per their listing agreement once they enter the property in the MLS (Multiple Listing Service).

     So if a seller hired a listing broker to sell their home for a 6% commission the listing broker can agree to split the 6% commission with the real estate agent representing the buyer. Sometimes the split is in half, sometimes it can be more or less. It depends how the hired Realtor wants to do the split or how much of a commission he took in the first place.

     A lot of buyers don't realize that they can have their own representation when buying new construction. In most cases the builder offers a commission or referral fee to the agent that registers the buyer. The key with new construction though is the Realtor must be there on your very first visit or the builder will not allow them to represent you and get paid. If you bring a Realtor to register you make sure they are willing to go through all the important steps with you. (i.e. contract signing, design center, loan meetings, walk through, home inspection etc.) I always want to be there for my client to protect and advise them properly to the best of my knowledge.

     In some cases if a buyer wants to buy a FSBO (For Sale By Owner) and the seller does not want to pay a Realtor whatsoever the buyer can choose to hire a Realtor and work out a commission with them. For example; I had a client that wanted to buy a house from an acquaintance. The seller refused to pay an agent and really wanted nothing to do with one. My client had worked with me in the past and wanted my representation to protect her regarding contracts, escrow, proper disclosures, contract time frames, and all her rights. We worked out a deal (commission is negotiable) so I would only represent her. 

   Who Pays the Realtor's Commission When I Buy a House?  When hiring a Realtor to represent you in your purchase you should interview a few agents first. It's not only about finding a house. That's only the beginning. Someone that is full time, well educated in the area, very knowledgeable about contracts, buying "as is" , and contingency time frames is important as well. I recently had a client call me from Sacramento asking me to help her get her deposit back because her local agent (a friend) let her remove all her contingencies and then she couldn't get a loan. She was told she would loose her deposit. Luckily I was able to help her get her $10,000 back but I know many times consumers get ill advised and loose their money.

      When a buyer goes directly to the seller's Realtor that is exactly what you're getting....  the seller's Realtor, Yes, they have a fiduciary duty to you but they also have a relationship already established with the seller's. I hate representing both sides because I love fighting and protecting to the best of my ability for my client. If I represent both sides I can only advise both buyer and seller and it's between them. 

     In any case in this market you should have an experienced Realtor working with you throughout the home buying process. The seller in most cases pays the commission so there is no reason not to. Some will argue you pay for it in the price but I offer this. The market keeps that in mind, that's why there is appraisals to make sure you don't over pay. Also if you have your own Realtor they can possibly negotiate the house down in price more than a seller or seller's Realtor would for you. We are in a very challenging market right now and chances are you need someone on YOUR side.