Navigating Buyer and Seller Commissions in Real Estate

Discover who pays the buyer agent in today’s real estate market.

In today's real estate market, a commonly asked question is: Who actually pays the buyer agent commission? With recent developments and trials in the industry, it's crucial to understand the dynamics of real estate commissions and the contracts involved.

The two key contracts in residential real estate are the listing contract and the buyer agency contract. The listing contract, typically for sellers, often includes both the listing commission and the buyer agent commission. This might lead sellers in Indiana to wonder why they are paying for the buyer's representation, especially when it appears to be negotiating against them.

This arrangement is due to what's known as the 'clear cooperation rule', as stipulated by the National Association of Realtors and the Indiana Association of Realtors. The listing agent collects the total commission and ensures that the buyer agent's fee is paid at closing. Sellers need to know that this commission, including the buyer agent's portion, is negotiable.

"I always recommend getting your own representation."

On the other hand, the buyer agency contract is a legal agreement between a buyer and their agent. It typically states that any buyer agent commission offered by the seller will be accepted as part of their fee. However, there can be variations, so buyers need to understand the specifics of their contract.

Navigating these contracts can be complex, which is why I always recommend getting your own representation. Engaging in a limited agency agreement, where the buyer and seller work with the same agent, is legal in Indiana but not always advisable due to potential conflicts of interest.

For more detailed information on these contracts and how they might affect your real estate dealings, feel free to reach out for personalized advice and assistance.

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