BlogA Summary of How Buyer's Agents Are Paid
Posted about 2 months ago

A Summary of How Buyer’s Agents Are Paid

Buyer's Agent

 The Seller list their home with a Real Estate Broker and agrees for the Broker to advertise the home on the MLS

The home Seller agrees to a commission as part of the listing agreement

The home is listed on the MLS showing an amount or percentage to be paid to any Licensed agent/Broker who brings a buyer they represent

Upon closing, the full commission is paid to the Broker listing the property whether they represent the buyer and the seller or just the seller

If there was an agent/Broker representing the Buyer, the Seller’s Broker splits this commission with the buyer’s Broker as agreed upon in the MLS


First of all, let me explain the difference between a Real Estate Agent and a Broker. In Minnesota, only licensed Real Estate Brokers are legally allowed to get paid for selling or buying real estate on behalf of another person. There are some exceptions to this including employees of home builders and Attorneys or folks handling an estate where they are given the legal right to sell or buy real estate on behalf of another person, but this is generally the law. In some cases Real Estate agents are also licensed Brokers, such as in my case, I am a Real Estate agent and a Licensed broker. However, if a Real Estate Agent is not also a Broker, they will need to be working under or for a Broker Licensed to sell real estate in the state of Minnesota. This Broker will be the actual entity or person who you have an agreement with when you put your home on the market or use an agent to assist you in buying a home. When a seller puts their home on the market and on the MLS, they have to list it with a licensed Broker. In most cases the Broker will be a member of the multiple listing service or MLS. When individuals sign a listing contract and agree to allow a Broker to assist in selling their home and to put the home on the MLS, that seller also agrees to pay a commission on the sale of their home. In the vast majority of these agreements, I would say more than 90% of them, the commission amount that is to be paid by the seller at closing is the same whether the seller’s listing agent or broker represents just the seller or the buyer and the seller. If the Broker is charging the seller a different commission when they represent both sides, this should be noted in the MLS as a variable fee listing. In the MLS listing the amount of commission the Broker is sharing with another Agent or Broker that brings a buyer will be displayed. In most cases, in order for the Buyer’s agent to receive this commission, the agent must be representing that buyer and the buyer must be working with this agent prior to purchasing the home. This, “commission split,” often takes place at or within a few days after closing and it basically amounts to the broker that listed the home paying the Buyer’s broker or agent the agreed-upon amount as stated in the MLS. The “commission split,” varies and there is not a set amount, however, it is often less than half the total commission that a seller’s Broker receives from a sale.


Yes, Yes, Yes!! In fact, when buying new construction you are foolish NOT to have your own agent. Due to discrimination laws, the home builders are not allowed to charge a different price or give different terms to customers with an agent vs. those without representation. You should understand that all agents at an open house or builder’s model are working on behalf of the builder or seller and just like a agent selling a resale home, their sales reps in a builder’s model are primarily looking out for the interest of the seller or builder. You deserve someone on your side to assist you with what can be a very overwhelming process. Most major builders (Pulte, DR Horton, Mattamy, Lennar, etc.) actually go out of their way to work with agents who represent sellers; they know that buyers working with agents are often better prepared and supported throughout the whole process and that often makes it a smoother transaction for all involved. The commissions paid by builders to the buyer’s agent is well advertised to all real estate agents and brokers and is agreed upon as long as the builder is aware you are working with an agent upon your first contact with them. So be sure to call your agent before you visit builders or their models or just carry along a few of your real estate agents business cards with you so you will always have one available to show when you visit any open house or model. I have represented many buyers in new construction purchases and know of the many pitfalls you want to avoid as well as a few tips to makes sure you get the best deal for your money. I can also assist you with doing a complete analysis between new construction and resale homes if you are considering both.

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