When a home seller employs a listing agent and the property is purchased by a buyer without their own agent, a unique situation arises regarding the real estate commission. This scenario, involving a represented seller and an unrepresented buyer, often confuses homeowners about the destination of the buyer’s agent’s typical share. The financial outcome depends almost entirely on the specific terms outlined in the legally binding contract between the seller and their listing brokerage. This agreement determines whether the seller sees a reduction in costs or if the listing brokerage receives the entire fee.
Understanding the Standard Real Estate Commission
The real estate commission is paid by the seller and calculated as a percentage of the final sale price. This compensation traditionally ranges from 5% to 6% of the total purchase price. The total commission is not paid to a single agent but is split between the two brokerages involved in the transaction.
A conventional sale involves a listing brokerage, representing the seller, and a cooperating brokerage, representing the buyer. The total fee is typically divided equally, with each brokerage receiving approximately 2.5% to 3% of the sale price. The portion designated for the buyer’s agent’s firm is often referred to as the cooperative commission.
The Listing Agreement Dictates Payment
The contract signed between the seller and the listing brokerage, known as the listing agreement, governs the entire commission structure. This legally binding agreement establishes the total commission rate the seller must pay to their listing brokerage upon a successful sale. The contract typically specifies a gross percentage, such as 6%, owed to the listing broker, regardless of how that fee is subsequently split with a cooperating agent.
The seller is responsible for paying the full contracted commission amount, even if a buyer’s agent is not present. The listing agreement is an arrangement solely between the seller and their broker. Unless the agreement contains a specific provision for a reduced commission when the buyer is unrepresented, the seller must pay the full fee.
Allocation of the Unrepresented Buyer’s Share
When a buyer chooses not to retain an agent, the commission portion initially earmarked for the buyer’s agent does not automatically revert to the seller. Instead, the listing brokerage typically retains the entire gross commission. This happens because the listing agreement entitles the seller’s broker to the full fee stipulated in the contract.
The listing brokerage receives both the listing side and the cooperative side of the commission. This outcome results in the brokerage receiving a significantly higher payout than in a typical transaction. The listing agent’s firm essentially acts as a single agent facilitating the entire sale, and the commission is distributed internally within that brokerage.
Potential for Seller Savings and Negotiation
Many sellers assume they should automatically save the 2.5% to 3% that would have gone to the buyer’s agent if the buyer is unrepresented. While the listing brokerage is contractually entitled to the full commission, seller savings exist primarily through negotiation. The most effective time to negotiate a reduced fee for this scenario is before signing the listing agreement.
A seller can request a clause specifying a lower total commission, such as 4% instead of 6%, if the listing brokerage procures a buyer without a cooperating agent. In this situation, the listing agent’s firm still earns a higher net amount than in a traditional split. Even if a provision was not included initially, some listing agents may be open to a reduction or refund.
Risks of Working with an Unrepresented Buyer
The listing agent’s increased workload and liability often serve as the basis for resisting a commission reduction. When a buyer lacks representation, the listing agent frequently assumes additional duties guiding the buyer through the complex transaction process. This includes explaining contracts, coordinating with lenders, and managing deadlines, responsibilities typically handled by a buyer’s agent.
This expanded role increases the agent’s liability, as they must avoid providing advice that could be construed as representing the buyer’s best interests. This situation can lead to disclosed dual agency in some states, where the agent represents both parties. This requires specific legal disclosures and informed consent. The agent must maintain their fiduciary duty to the seller while dealing fairly with the unrepresented buyer, creating a more challenging process.