How to Pay the Real Estate Agent


The question of how to pay the real estate agent is one that arises during every sale. There are many ways to pay the agent, and each has different tax implications. This article will go over how to split the commission between the seller’s and buyer’s agents. It will also discuss the average commission rate and discounts for both sides. We will also discuss the Tax implications for the buyer’s agent. Below are some tips for paying the agent:

Commission split between buyer’s agent and seller’s agent

If you are the buyer, you will want to negotiate the commission split between the buyer’s agent and the seller’s agent. While it may be tempting to pay the agent directly, you can’t. While it is not uncommon to pay an agent a portion of the commission, this isn’t always the best option. The best thing to do is look at the other options, like a transactional agreement, which only involves the buyer’s agent setting the asking price, facilitating communication with the buyer, writing the contract, and moving the process along to closing. Also read


A seller’s agent will get a commission of approximately 6% of the final sales price, and the buyer’s agent will receive a commission of up to 30% of the sale price. Typically, the seller will factor the commission into the asking price, which means that the buyer will be paying for the commission through the sale price. Both parties will have an agreement with a sponsoring broker regarding the commission split, which allows the broker and agent to split their commission 50/50.

Average commission rate for buyer’s agent

Consumers can now see the average commission rate for a buyer’s agent on a real estate website. This policy was passed by the National Association of Realtors and will be applied to more markets in 2022. The increase in competition may be contributing to a decline in the buyside commission rate, but sellers still understand that they’ll probably find a buyer regardless of the commission they receive. This could also increase the number of buyers searching for a home, thereby driving down the cost of commission.

Traditionally, buyer’s agents had to manually pull listings, price homes based on comparable sales, and handle offer and closing paperwork. Additionally, they might have to spend as much as 80% of their time driving around to find potential clients. This sunk cost is made up by the 2.5 to 3% buyer’s agent commission. The difference between a flat fee and a fixed fee is significant.

If the commission is higher than the seller’s fee, the buyer will have to make up the difference.

Discounts for buyer’s agent

In traditional home selling practices, the seller and buyer’s agent work hand in hand and both receive a commission from the seller at the closing. Typically, the buyer’s agent earns 3% of the total sale price, while the seller pays between 3.5 and 4%. That means that the seller pays a total of about 6% of the home’s proceeds to real estate agents. Discounts for buyer’s agents are one of the best ways to save money on your real estate transaction.  


Typically, discount agents do a lower level of service, such as listing your home without photos, or taking only adequate photos of your property. These agents often have lower commissions, but the services they offer are less than adequate. You can’t expect to sell your home as quickly as a full-service agent, so working with a discounted agent might be worth it if you can get lower commissions. The disadvantages of discount agents are that they have lower service levels.

Tax implications for buyer’s agent

As a buyer’s agent, you’ll want to be aware of the tax implications of the transaction. Most real estate agents, who are paid a commission for their services, will redirect part of the commission back to the buyer. In this scenario, the agent earns a total commission of $25,000 + HST from vendors and then credits yourself $5,000. While a rebate from the agent is a non-taxable event, when it comes to investing property, this amount can have tax implications.


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