There are a lot of fees that come that with buying or selling a home, including paying the Real Estate Agents involved in the transaction. Agents are paid commission on the sales that they are a part of, but who does the money actually come from? A lot people think that the buyer and the seller each pay their respective agents, but in the state of Hawaii the buyer pays nothing. That's right, as a buyer you do not pay your agent's commission. They still owe you the same legal responsibility to look out for YOUR best interest. 

 

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How do the Agents receive their commission?

The seller typically pays the agents' commissions at the settlement table, where the fee is taken out of the proceeds from the home sale. But it doesn't usually go directly to the real estate agents. Instead, the agent fee typically goes to the listing broker who reallocates part of the payment to both the listing and buyer's agents. If you're selling a home, you'll probably end up tacking on the agent fee to the listing price of your home.

 

How much is the commission for a Realtor?

For the majority of agents, their commission is a percentage of the sales price. 6% of the total sales price is pretty common. Now there are some realtors and brokerages that will sell your home for one flat fee, whether the price of your home is $100,000 or $100,000,000. As a seller, it is important to know which pay structure your realtor uses.

 

This percentage is split between the buyer's agent and the seller's agent. But don't worry, whether you are the buyer or the seller, you won't be involved in determining how that percentage is divided. This is a separate contract worked out by brokers. 

 

Dual Agency: When one agent represents both parties

Dual agency refers to a situation in which one real estate agent represents both the seller and the buyer in the same transaction. While this might seem ideal for the agent who won't have to split their commission, it is definitely not ideal for the buyer and seller. While both the buyer and seller are less likely to have all of their needs met, it particularly disadvantageous for the buyer. You see, in dual agency contracts in Hawaii, the agent owes a legal responsibility to the person paying their bill - the seller. It much easier for a buyer to be taken advantage of or to lose out on negotiations when they don't have their own agent. As someone who has bought a home without their own agent before, my advice is to hire your own realtor. They understand the paperwork, how to negotiate the contract, and they can help you navigate any unforeseen obstacles that might arise with home.

 

 So then, what do closing costs cover?

Closing costs are determined separately from the agent fees, and might be paid by both the seller and the buyer. Closing costs can cover loan processing, title & escrow fees, surveyor/appraisal/inspector costs, administrative costs, insurance, and taxes or homeowners associations fees. Typically closing costs come out to anywhere between 2% and 7% of the total sales price of the home. Your agent should provide you a lay out of the closing costs, and your lender is required by federal law to give you a "good-faith" estimate of your closing costs. 

 

Who pays the closing costs is one point up for negotiation in your contract. This is one area where you definitely want your own agent to navigate and advocate for you. There are so many ways to split and finance the closing costs in a transaction, and you want to make sure that it is not only fair, but that you can cover whatever your share comes to. 

 

Original article: "Real Estate Agent Fees: Who Pays the Bill," posted by Realtor.com on 19 Feb 2019