Utah Home Central Blog Information about how to sell and buy real estate at discounted prices and various other topics.

How Do Commissions Work

How Do Realtor Commissions Work

Do Buyers pay realtor fees in Utah?


If you're wondering how Realtor commissions work or how realtors get paid, then you're not alone. I've been selling real estate for 18 years now and I get this question all the time. Traditionally realtors have charged 6% of the sales price of the home. This is a hard pill for most homeowners to swallow and for good reason. For example, if you were to sell your house for $500,000, you would pay $30,000 in commissions. THAT'S A LOT OF MONEY!

There are some agents who actually believe that 6% is standard and all agents are required to charge their clients 6%. They will even tell their clients their broker requires them to charge 6%. This second part might actually be true, but there is no law or statute that says realtors must charge 6%. In fact, the truth is, realtors can charge whatever they want to as long as their broker is okay with it.

It's important to remember that the MLS does require the listing agency to share its commission with any cooperating brokerage that brings them a buyer. Typically, agencies charging 6% would advertise on the MLS that they will split their commission with a cooperating brokerage; 3% to the listing agent and 3% to the buyers agent. However, they don't have to do that. The listing agency could keep 4% and only offer 2% to the cooperating brokerage or vice versa. It's also important to point out that if there isn't a cooperating brokerage, in other words, the buyer is unrepresented, you will still be obligated to pay the listing agency the 6%.

This is a little different if you go with a discount brokerage or flat fee real estate agency. For example, Utah Home Central charges a flat fee of $2,800 for our services and we give our clients the option of what they will pay the cooperating brokerage. One of the most frequent questions I get from clients is, Why do we have to pay a commission to the buyer's agent?

In reality, you're not paying the buyer's agent; the listing broker is. Regardless of who lists your home on the MLS, they will be required to offer a cooperating brokerage (i.e. buyer's agent) a part of their commission. So instead of paying 6% as you would with a traditional agency, you are paying the listing agency the flat fee charge, $2,800 in our case, and 3% which the listing agency will offer to the cooperating agency. However, this is still a considerable savings over a traditional 6% agency.

I don't know about other discount brokers, but if there is no cooperating agency, Utah Home Central does not require the seller to pay them the 3% or whatever they were offering to the buyer's agent; another considerable savings.

So to sum things up, most buyers do not have to pay anything to their agent because the listing agent will share his or her commission with your agent. However, some brokerages put in the contract that they must get paid 3%. So if the listing brokerage is only offering 2% to the buyer's agent, then the buyer may have to pay their agent 1% to make up the difference. Utah Home Central does require buyers to make up the difference. As a buyer using Utah Home Central, you will not be required to pay us anything. In fact, with our buyer rebate program, we actually pay you. Click here to learn more about our Buyer Rebate program. Hopefully, this clears things up regarding commissions. However, if you have further questions, please feel free to reach out to us.