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Do Buyer’s Real Estate Agents Work For Free?

Who Pays the Buyer's Agent
Free Buyer’s Agent for Home Buyers

The short answer is No, and the long answer is No as well.

At least not the real estate agents that I know.

In most cases the Realtor® or real estate agent representing their buyers, work for “free” for the buyer. In other words, the buyers won’t pay the buyer’s agent anything. And now you may be thinking that the short and long answer should be Yes. But nope, still No.

The buyer’s agents do get paid when representing their clients on their home purchase, but only when the transaction is completed. And they usually get paid from the listing agent or seller, but not from the buyer’s pocket. What’s going on with this “usually”? Well…sometimes a buyer will pay the buyer agent’s commission when they buy a foreclose property or auction property were the seller is not commited to pay the buyer’s agent compensation.

And now the million dollar question… Since the listing agent or seller are paying the buyer’s agent compensation, is the buyer’s agent working for the seller? And the answer is no again. The buyer’s agents and/or  Realtors® in general, pledge themselves to protect and promote the interests of their client.

When a property goes on the market for sale, the listing agent signs an agreement with the seller that defines the price of the home and the compensation that the listing agent is going to get paid once the house sells. By this point in time, the seller already knows how much is going to cost them to sell the property regardless of who sells the house.

The house can be sold between a buyer’s agent representing the buyer and the listing agent representing the seller, or the listing agent can sell it to one of his/her own buyers as well (At least in Texas it’s allowed) and represent both, the seller and the buyer. According to the Code Of Ethics and Standards of Practice of the National Association of Realtors®. Texas Realtors® may represent the seller and buyer in the  same transaction only after full disclosure to and with informed consent of both parties.

Anyway…If you are wondering who pays who and how, here is the deal:

House Listed For $2,000,000 and the Listing Agent Compensation is $100,000 (Every Realtor or Broker have different compensation)

If it is sold by the listing agent representing both parties, the total compensation for listing agent is $100,000

If it is sold by listing agent and buyer’s agent, the compensation split usually would be 50/50 (At least in El Paso TX). $50,000 for listing agent and $50,000 for buyer’s agent.

The seller will be paying $100,000 compensation to listing agent in both scenarios.

So if you are thinking to skip the buyer agent and go straight to the seller or the listing agent because you will get a better deal, guess what??? You won’t be saving a dime, because the listing agent compensation was agreed even before the home hit the market.

My recommendation is to hire you own Realtor® (hopefully me) to represent you and only you, and let him/her do the best possible job by negotiating with the listing agent and get you the home of your dreams.

When you hire your own Realtor® you don’t have to worry about finding available homes online or driving around neighborhoods to see if you find a for sale sign. And the best part is that your real estate agent has the ability to send you listings of all the available homes for sale and set up the appointments to tour any of the homes you liked, without you having to do anything. That’s why he/she gets paid..Not by you, remember.

If you are thinking on buying a home soon or a year from now and want to chat about the process, I’ll be more than happy to answer any questions that you may have.

My real estate license covers only Texas and I do most of my business in El Paso TX and Fort Bliss area, but if you are relocating to a different city or state, I could connect you with other great Realtors®.

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