In a typical real estate transaction, the seller pays the real estate commissions. The seller enters into a listing agreement with a real estate agent or broker, which outlines the terms and conditions of the agent's representation in selling the property. The listing agreement specifies the commission rate, typically a percentage of the final sale price, that the seller agrees to pay to the listing agent and the buyer's agent. This part is private, between the seller and her listing agent. The buyer's commission is usually listed on the MLS, and can be a percentage of the price or a flat fee, usually set to 3% of the total price, same as the listing agent's usual commission. (Azure Coast works on 1% commissions - there are a few like us out there!)

The listing agent and the buyer's agent split the commission, according to the above arrangements, with each receiving a portion of the total commission. The commission is usually paid at the closing of the sale from the proceeds of the sale and paid out by the buyer's closing attorney (attorneys are a requirement in South Carolina). The buyer "funds" the deal by sending "good funds" to her closing attorney, who then disburses out all of the monies as directed in the settlement statement. Prior to closing, the attorneys will reach out to the agents / brokers to ask what the commission splits are and how to pay them out. It's usually a check somebody can pick up, or sometimes paid as a wire to the brokerage, after all the funds have settled.

It's important to note that the commission is a negotiable aspect of the listing agreement. The seller and the listing agent can negotiate the commission rate and other terms. In some cases, there may be alternative fee structures, such as flat fees or tiered commission rates, depending on the specific arrangement between the seller and the listing agent. Both sides must have negotiable commissions by law. There cannot be a collective "the real estate market charges a 6% commission on all sales," because of federal price fixing laws- to the extent that even the state forms used for these commission agreements must have a fillable line for the commission amount which cannot be typed in permanently!

While the seller typically pays the real estate commissions, it's worth mentioning that the overall cost of the commissions is factored into the listing price of the property. The seller considers these costs when determining the listing price to ensure they still achieve their desired net proceeds from the sale. Therefore, even though the buyer isn't directly paying the commissions, it's important for the buyer to understand that the commissions are indirectly factored into the overall costs associated with purchasing the property, which could influence the final negotiated purchase price.

This is why we cap our fees at 1% - If we're handling only the listing, that's 2% minimum back in the seller's pocket. We generally suggest a tiered buyer's commission based on the price point of the home as well - up to 2.5%, but flat fees are often beneficial, too. That can really add up for both parties - if a 3% buyer's commission is offered, and we're serving as the buyer's agent, that allows our client to offer 3% less on the price and still have it count as full asking as far as the seller is concerned. On a home pushing $500k or more, that is a huge chunk of the reno budget (we don't always do buyer's side, but those fees are usually only $500 flat fee, not even 1%). These numbers have significant impacts on the purchase price for both parties!