Why Buyers Do Not Pay Commissions on Listed Properties

A real estate company is misinforming the public by saying that buyers actually pay for real estate commissions on listed properties. According to information on their web site, "the buyer is the only person bringing a checkbook to the closing, and both commissions come out of the money the buyer provides."

While it is true that buyer's bring the money to the table, the seller's costs of sale are not the buyer's expense or responsibility. If buyers actually paid commissions, they would be paying the purchase price PLUS sales commission. However, this is not the case with listed properties.

The truth is that commissions on listed properties are actually deducted from the seller's side of the closing statement--not the buyer's side.

This means that the seller receives the purchase price first, and then his or her costs of sale are simultaneously deducted to result in net sale proceeds. The notion that buyers pay commissions on listed properties makes about as much sense as employers paying for their employee's income tax deductions. For example--an employee's paycheck--he or she must receive his or her pay first (aka. gross pay) before taxes are simultaneously deducted to result in the employee's net pay.

Likewise, buyers do not pay the seller's costs of sale on listed properties, because these costs are deducted from the seller's gross sale proceeds, which gives them their final net sale proceeds.

It needs to be said that inciting consumer bitterness with skewed information is wrong. It is better to bring about positive changes in the real estate industry without distorting the truth. Buyers can save money by negotiating buyer rebates with agents or brokers in states where it is allowed. It is not proprietary to the company mentioned in this news story.