Help Me Understand Commissions

Then comes that pesky business of paying the real estate agents...they do like to eat...

There is a common misunderstanding with commissions in a real estate transaction--many buyers think that they have to pay for their agent's services.  This is not the case.  The sellers are the ones who actually pay all of the real estate commissions in the transaction.  What this means for you as a buyer is that you do not pay out of pocket for the services.  So, the bottom line is that using a real estate agent as a buyer is free of charge.

The typical commission in the Louisville real estate market is 6% total.  The percentage is split to be 3% to the listing agent (agent for the seller) and 3% to the selling agent (agent for the buyer).  This percentage is based on the sales price of the property.  So, for example, a $100,000 property would have $6,000 in commissions paid at closing.  The $6,000 is paid by the seller, and it shows on the seller's side of the closing statement.  $3,000 goes to the selling agent, and $3,000 goes to the buying agent.

Some may wonder why the commissions are set up solely on the selling side.  The concept is that you, as a seller, are paying your agent for his or her services to properly list and market the property and negotiate the contract.  The other part of the commission is paid for the buyer's agent to bring the qualified buyer to the transaction.

Please let me know of any real estate questions or needs you have.

Matt Gatewood

Realtor®

Keller Williams Louisville East

502-594-6582

www.gatewoodproperties.com