Who pays for realtor services and why. Detailed analysis

April 19, 2021 GetHom expert 53,262

Sometimes it can be difficult to understand who actually pays the realtor's commission - the seller, the buyer, or the realtor's service is free for someone. What exactly is the service of a realtor and how does he appear in a transaction if no one invited him.

Let us carefully examine the options for paying the cost of the intermediary's commission when selling and buying an apartment. We’ll tell you how to determine who exactly pays for the realtor’s services in a transaction and conduct a detailed analysis. Why does the seller almost always pay, even though the services are free for him?

At the end of the article, you will understand that in fact the realtor gets paid from your money, even if you think that this is not the case. If a realtor participates in a transaction and imposes his services on you, saying that they are free, then this is just a psychological trick.

Intermediaries and real estate agencies do not work for free, money is simply hidden behind tricks and promises. Below we will tell you why in Ukraine they take a commission from the buyer of an apartment and why it is the seller’s money.

How the services of a realtor appear in a transaction for the buyer

In the vast majority of cases, buyers do not contact a realtor themselves; on the contrary, they try to find an apartment without intermediaries. 90% of buyers are ready to buy an apartment without intermediaries, but rarely find advertisements from the owners.

A realtor with his services himself appears between the seller and the buyer, and all this thanks to a well-established scheme. This is a long-standing and proven scheme of intermediaries to penetrate into a transaction and force them to pay a commission.

This is the job of a realtor - to earn himself 2-3 thousand dollars, even when no one called him.

The scheme is called thousands of ads. The intermediary simply finds an advertisement from the owner, copies the photographs and lists the same apartment, but with his own phone numbers. Hundreds of intermediaries throughout the city will do this.

As a result, the owner’s ad is lowered far in searches on real estate websites and ordinary clients simply cannot find it. The buyer will call one of the realtors and will be asked to pay the realtor's services and the full commission of 5%, because the intermediaries' advertisements are always at the top. Read the article below - a lot will become clear about the work of realtors.

Related article: How realtors deceive - 28 schemes

Thus, the buyer has a realtor who does not leave his side until the end of the transaction. The main task of a realtor is to prevent the buyer and seller from exchanging phone numbers.

Intermediaries even have an unspoken rule - not to leave the buyer, so that they do not accidentally end up in the same room with the seller. That’s why there are often 2 realtors per showing. One looks after the seller, the second looks after the buyer.

The intermediary tries in every possible way to intimidate and turn the buyer against the seller so that the transaction is not carried out without a realtor.

How much percentage does the realtor receive from the transaction?

A realtor’s earnings largely depend on himself: the more deals he concludes, the higher the income he receives. As Svetlana Birina, head of the city real estate department, explains, on average a manager “closes” two to three transactions per month. “Naturally, there may be more or less of them. The work of a realtor itself is such that it doesn’t happen from month to month, since some transactions go through quickly, while others can drag on,” she clarifies. According to INCOM-Real Estate, the average agent commission is 4-6% of the transaction amount. It all depends on the complexity of the object implementation. If the apartment is illiquid, and the seller, for example, sets a condition - to sell the offer in a couple of months, then the commission will be higher, if the object is standard - lower. A realtor who works with or is an employee of an agency earns an average of 35% of the commission. In addition, the profit from a particular transaction is also affected by what kind of work the broker performed: whether he supported the transaction from beginning to end, or simply brought the client to the agency, or just negotiated. The less the agent invested in the process, the less he earned.

Based on the above, it is easy to calculate the approximate earnings of an ordinary realtor working in the economy-class housing market of the Moscow region. If a broker concludes three deals a month, each involving a budget apartment worth 4.5 million rubles, then the agency’s commission will be 540 thousand rubles, and the broker’s earnings will be 189 thousand rubles.

How are the services of a realtor presented to the seller?

The seller usually places an ad on the Internet himself and displays his photographs. The owners understand that it is better to sell directly to the buyer for a higher price than to share 5% of the cost of the apartment with an intermediary.

An hour after the listing, the owner will start receiving calls from realtors with an offer to add the apartment to the real estate agency database.

All realtors claim that the realtor service is free for the seller. This is what bribes the seller, that the realtor will sell the apartment, and the seller doesn’t care who does it, the main thing is that it is not he who needs to pay the 5% commission.

The seller says - bring a buyer and take a commission from him, I agree, an excellent option. As a result, it turns out this way only in theory - the commission is borne by the buyer and costs the seller nothing. But this is just a theory. The realtor's services are always paid for, but in a more hidden form.

Rent a property without an agent

How to rent an apartment without commission? As noted earlier, you can rent a suitable option without intermediaries, but finding it is quite difficult, and sometimes almost impossible . But there are several ways to get information without paying a commission:

1. Come to the inspection together with a realtor, and, if the owner is present during the inspection, try to arrange a meeting with him later and conclude a deal directly .
2. a figurehead instead of yourself for inspection , and after finding out the address, contact the owner.
3. Access the database and find an option there.

Of course, all these methods are scams, but they help save some money.

In addition, you will not pay any money as a commission if you find housing to rent on your own.

What does it mean to “rent an apartment without commission”? Study advertisements on special websites and in newspapers, advertise your desire to rent a home.

Selling an apartment without real estate services

There is such a concept - market price. Every apartment has it. Let's look at an example. Let's say there is an apartment with an owner's price of 42 thousand. A buyer comes to him and negotiates.

The buyer wants to buy cheaper, and they negotiate on price. As a result, they agree on a compromise solution - 40 thousand.

This is exactly what the market price will be – 40 thousand. Both the seller and the buyer agree. In this case, the seller receives the maximum price offered for his apartment, and the buyer does not overpay and buys at a profit.

This is the most advantageous situation. Both the seller and the buyer are satisfied with the result and are ready to conclude a deal. No one overpaid or lost.

They can go to a notary to formalize the transaction. The main thing for the buyer is to check the documents for the apartment before doing so, so as not to be left without money and without an apartment.

Read more about checking documents before purchasing in a separate material:

Link: How to check an apartment and the seller before buying. Online.

Paying for a safe deposit box

The list of what the buyer pays when buying an apartment also includes renting a safe deposit box. It will ensure security for the buyer’s finances and the seller’s property. It will be a guarantee that the seller will not disappear with the money until the property is re-registered. Renting a safe deposit box from a bank for processing will save you from many problems and risks: from the possible cancellation of the transaction halfway through to the recognition of the transaction as invalid after settlement. Moreover, this is a good talisman against scammers: they try to avoid real estate transactions involving banks. This is a guarantee that the seller will receive payment if the property is successfully re-registered. If something goes wrong and the transaction does not take place, the buyer will return the entire amount.

This happens as follows:

• The buyer rents a bank safe and places money for the apartment there. The cell is removed after all issues regarding the transaction are resolved and the purchase and sale agreement is signed. In this case, the buyer recalculates the amount in front of the seller and, before his eyes, places the money in the cell
• If desired, verification of the authenticity of funds is ordered. Who pays for the money check when buying an apartment? This is done by the seller, because the process is in his interests. As a rule, the real estate seller pays for checking the authenticity of banknotes, even if payments are made without going through banks
• The key to a bank safe is most often given to the seller (the second key remains in the bank). You can only open the cell with two keys at the same time
• The buyer receives a receipt for the key storage from the seller
• After registering the property, the seller must come to the bank with the key

Renting a bank safe will cost the buyer 1,500-4,000 rubles. The amount depends on the selected bank and cell size. Tariffs for renting a safe are set by the bank, and some credit organizations provide their clients with a grace period for storing funds.

What happens if there is a realtor in the transaction?

With the advent of the realtor’s service in the transaction and the intermediary’s commission of 5% of the apartment price, the situation is changing. The seller and buyer agreed on a price of 40 thousand, but now it turns out that they need to add an additional commission of 2 thousand dollars. Who should pay it?

The total amount of the apartment is either 38 thousand for the seller, or 42 thousand for the buyer. Both sides are not happy with this development of events. The one who ordered the service with his own money must pay.

And it is not clear who ordered the service, because the intermediary himself appeared in the transaction and brought the buyer to the apartment to the owner. This means the customer ordered the service.

The price of 40 thousand dollars without a commission for the realtor’s service suits both the seller and the buyer. One wants to buy for 40, and the second is ready to sell at this price.

But let's look at further developments with the realtor's commission of 5%. Let's tell you how this happens in most cases.

• The deal breaks down and the parties quarrel without agreeing on the realtor’s commission, because no one invited the intermediary - no one wants to pay him. The apartment is not sold. Everyone is upset.
• The second option is that the realtor will persuade one or both parties to make concessions and persuade the buyer to pay an additional payment, and the seller to an additional discount. Each party to the transaction loses $1,000 in commissions to the realtor.
• The third option is that intermediaries put pressure on the seller regarding the cost of the apartment itself and take a commission from his money, even though the seller thinks that the realtor’s service was free. The seller loses 2 thousand dollars, thinking that the buyer paid, and it was just a bargain. This is the most common option in Ukraine. In this option, the realtor actually worked for the buyer and received money for it. And the seller lost them.
• The fourth option is that the buyer simply pays 2 thousand dollars because he wants to buy this particular apartment and from this particular seller. The buyer in this option loses 2 thousand dollars. This rarely happens, because there are many similar apartments on the market and you can simply buy another one. Everyone counts money.

How much does a professional and novice realtor earn?

• Legal aspects of transactions. Mortgage, maternity capital, military certificates - all these documents are often used to purchase housing and require certain legal knowledge. Clients have many questions related to the legal side of the transaction - and they need to know the answer to each of them.
• Market. It is worth accustoming yourself to weekly viewing of the dynamics of the real estate market. Especially now, when there is a crisis in the country, you need to be on alert, instantly reacting to the ever-changing demand and purchasing power.
• Locality. It is impossible to find good housing for a client without knowing the areas of the city. Quiet neighborhoods, business centers, luxury developments - you need to know what to offer the client.

There are many factors influencing the income of specialists. But it is possible to highlight averaged data. The average realtor salary in 2021 in Russia ranges from 50,000-60,000 rubles/month. Very encouraging indicators, right? But compared to 2013, the average income of realtors has decreased slightly - previously this figure was 75,000 rubles per month. Average data cannot fully show exactly what kind of income a specialist in this field can have. For example, the average salary of a realtor in Moscow and the region is 50,000 rubles/month. But in the Krasnodar Territory, specialists receive, according to analysts, around 100,000 rubles per month.

Who ended up paying the commission and who won?

The seller will receive 38-39 thousand, and the buyer will pay 40-41 thousand. So who received the realtor’s service for free, and who paid the commission? As a result, after this story, if the deal goes through, the realtor will be the winner.

Both the seller and the buyer lost some of their money. They were forced to pay a fee. But, if the realtor did everything correctly and helped in all aspects, then the parties will be satisfied with the result.

If the price of an apartment is 40 thousand and a realtor appears, then in any case someone will lose 2 thousand dollars. The buyer does not want to overpay for imposed services, and the seller does not want to lose money. But this is what usually happens in the market: someone pays.

Why is it usually the seller of the apartment who always pays the commission?

Now in Ukraine, thousands of apartments of the same type are sold in every city, and if the buyer does not buy from one seller, then he simply looks for another without intermediaries or with a lower commission. So the price would be just 40 thousand.

If there is a realtor in the transaction, then the buyer adds the commission amount to the price of the apartment itself. It turns out 40+2=42 thousand in total.

The buyer was initially not ready for this price, and since there are many apartments on the market, he will simply go and look at another apartment. As a result, the seller will not be able to sell the apartment. Therefore, the buyer bargains hard so that with this apartment his total price is 40 thousand.

It turns out that the seller loses money, thinking that this is a bargain, and this is just a hidden commission from the realtor. Without intermediaries with a 5% commission, the apartment would be cheaper for the buyer or the seller would receive more money from the sale.

Size

How much should you pay a realtor when renting an apartment? The average fee is the amount of the requested rent. This is usually between fifty and one hundred percent of the estimated rent.

The amount of the commission may also depend on the type of transaction being made. The selection of housing can be carried out by one agency or together with a partner. If two agencies work for you at once, then you need to pay them 100% of the monthly rent . They will divide this amount among themselves.

The size of the commission also depends on the liquidity of the proposed option. Simply put, the more profitable the property in terms of price-quality ratio, the higher the commission.

How to determine who exactly paid for the realtor's services

Let's say the initial price of the apartment is 40 thousand dollars.

• If the seller was selling an apartment for 40 thousand and an intermediary and a buyer came to him, did not bargain and bought the apartment for 40 thousand + 2 thousand to the intermediary, then the buyer paid the commission. This happens extremely rarely. They usually don’t want to overpay 2 thousand to a realtor.
• If the seller additionally gave up 1 thousand and sold for 39 from the original price of 40, then the buyer will pay in the end 39 + 2 = 41 thousand for the total cost of the apartment. It turns out that they paid the commission of 1 thousand dollars in half.
• If the seller gave up 2 thousand dollars and sold the apartment for 38, then it turns out that the seller himself pays the full commission to the realtor. This is not a bargain or a cheap apartment, but a hidden commission from intermediaries. The buyer still pays 40 thousand, and the seller receives 38. The buyer simply gives the seller’s money to the intermediaries. This is the psychological trick on the part of realtors. A very important point that many people miss.

What responsibility does a realtor have?

A realtor, as an authorized representative who is involved in the purchase and sale of real estate to his client, must always provide accurate and complete information:

• information related to real estate;
• information related to the procedure for re-registration of ownership;
• information about real estate registration;
• information about the conditions, procedure and amount of payments, about payments in government agencies, about deductions;

It is worth noting that the realtor is not responsible for the fact that the parties may violate the conditions specified in the real estate purchase and sale agreement.

If, due to the fault of the realtor, the registration of rights was delayed or there were shortcomings or errors in the drafting of the contract or the conditions thereto, then the client has the right to ask for a reduction in the fee for the work performed.

Why is a commission in Ukraine always taken from the buyer?

In Ukraine, it so happens that the buyer of an apartment can be forced to pay.
It's easier and more profitable. And buyers shift this burden onto the seller without paying extra for the apartment. So it turns out that the buyer pays, but the seller ultimately does not receive the full amount for the apartment. In Ukraine, we have a completely identical situation in most respects as in the video above. A commission is taken from the buyer, but it is usually the seller who loses money.

Therefore, if you want to pay the minimum price for an apartment or sell it at the maximum price, then you need to exclude the middleman from the transaction or find one with the lowest possible commission. You will get the best market value and no one will lose money - neither the seller nor the buyer.

But usually the parties cannot organize a deal or find an apartment on their own. In this case, the realtor helps, but charges 5% for his services. What to do is up to you.

If you can find an apartment on your own, then you don’t have to pay a realtor. All you have to do is find a real estate lawyer to support the transaction, check the documents and buy an apartment. It will cost much less than buying with a realtor.

We pay the realtor how, how much and for what

Secondly, the buyer risks much more than the seller. If there is something wrong with the documents, the transaction will be declared invalid, and it will be he who will be left without a roof over his head and without a penny! Of course, the court will rule in his favor, but 10 thousand rubles a month will not save anyone. In addition, the previous owners may hesitate to physically vacate the apartment and check out. In fact, there are quite a lot of dangers - we won’t list them all. The main thing is that you cannot cope here without the scrupulous work of a lawyer and the sophisticated diplomacy of a realtor. You can't go anywhere without an agency. Conclusion: the buyer must pay.

In general, payment methods for realtor services vary. But you probably want to ask the most sacramental question: “So how much?” We answer: on average from 3 to 6% of the value of the property, if the agency sets the interest rate, but in any case not less than 30 thousand rubles.

Real estate agency commission

In the segment of expensive urban real estate, the commission percentage usually ranges from 3 to 5%. In rare cases it can reach 6%. Real estate agencies receive the lowest percentages in the commercial real estate segment (1-2%), the highest in suburban real estate (3-10%).

Counterparty's share

From 30 to 50% of the amount received by the agency representing the interests of the seller is transferred to counterparties - partners who brought the buyer. As a rule, if an agency partner is a private person, then he can only claim 30%, maximum 40%.

How to do without the services of a realtor

If you have never bought or sold an apartment or have a vague understanding of this process, then an ordinary realtor can help you find an apartment. This is how they earn a commission. Usually they are not concerned about your future fate and possible problems with the apartment.

You can find an apartment on your own, through friends, or even look at it with a realtor. They don't charge money to watch. They say that the apartment viewing service is free. And then you need a real estate lawyer to check the documents and support the transaction.

He will check the documents and accompany the transaction. This service costs 5 times less than a realtor. You can see prices on the main page of our website or by following the link:

Related article: Real estate lawyer in Odessa

This way, you are confident in the documents, receive support for the transaction, and do not overpay for the services of a realtor in selecting an apartment. As a result, the net savings are about 1-2 thousand dollars.

If you need to sell an apartment, then there is also a solution. You can list your apartment on real estate websites and contact our lawyers. They will help you sell profitably and safely in any city in Ukraine. They will give their recommendations on how to prepare the apartment for sale and what needs to be done. How to negotiate and advise on all the main points.

Our contacts will be on the main page of the site. This benefits both the seller and your buyer. As a result, you will sell your apartment for more than with any ordinary realtor.

Kinds

A commission is a one-time amount paid when renting or renting a property. It should be distinguished from rent for premises. You can learn about what the payment for renting a living space includes, as well as what the tenant must pay for, from our articles.

If you negotiate directly with the property owner, there is no commission at all.

The commission paid to the agent is of two types:

1. When renting living space. It is paid by the client renting the living space . He pays for the provided, selected options and their demonstration.
2. When renting out living space. This type is paid by the owner for selecting tenants and negotiating with them.

In both cases, support for the signing of a bilateral agreement is paid.

What is the service of a realtor for a buyer?

The service of a regular realtor for a buyer is to show the apartment and contact the owner by phone. The intermediary bears no further responsibility. Only information service about the apartment. The realtor accompanies the transaction purely physically, just to receive his 5% commission at the end.

Intermediaries do not deal with any documents or their verification - this is a fraud. Intermediaries cannot thoroughly understand the legal intricacies and risks of real estate transactions. This is an area where a lawyer spends 10 years gaining experience and training.

For intermediaries these are just words, but you are risking money. Real estate agencies usually do not have lawyers on staff, only realtors. Usually everything is left to chance and no one turns to lawyers to check documents. Intermediaries do not risk money - it is not particularly important to them.

What are the responsibilities of a real estate agent?

The job of a realtor is to choose the right option for the buyer , taking into account his requirements and wishes. There are many nuances and issues that an experienced and competent realtor must understand, including law, record keeping, communication skills with the seller, and the nuances of conducting a transaction.

The specialist deals with issues that greatly simplify the purchase, ensuring its safety for the buyer. What does a realtor do:

• She is looking for an apartment , analyzing the market based on the price level for these objects and selecting the necessary option.
• Checks information in advertisements for accuracy , calling and weeding out apartments that have already been sold.
• Negotiates with the owner and arranges to view the apartment.
• Checks the object and documents for legal purity and prepares a complete package of documents for making a purchase.
• Provides related services - assistance in re-issuing documents, finding a bank to obtain a mortgage, etc.

We wrote in detail here about whether you need a realtor when buying an apartment and what he does.

Who does a realtor provide services to?

An intermediary is a seller of goods, only he sells apartments. Can a realtor-seller work for a buyer? Maybe, but solely in the interests of his earnings and his commission, selling what is profitable for him.

A realtor, like an ordinary seller, is a person interested in the transaction and needs to sell in order to make money. Here the interests of the intermediary and the seller coincide.

A realtor in most cases works solely in his own personal interests and does not defend any of the parties. He just got into a deal and is trying to make money.

In normal practice, a realtor should work for someone who ordered his services and who wants to use them. If you hire an intermediary and you need him, then agree on the cost and his obligations to you for this price.

The right realtor should help you save above the price of your commission and help, not hinder, the transaction for your own money.

Who pays the state duty for a purchase and sale agreement?

When the parties have signed the agreement, the fact of transfer of ownership is registered with the Rosreestr authorities. The buyer pays for the procedure. This is approximately 2,000 rubles for individuals and 22,000 for legal entities.

The buyer also pays for minor expenses: making copies of documents, transportation costs to the MFC and other government agencies.

If one of the parties does not have the opportunity to be present in person at all stages of the transaction, you can hire a representative. These services also entail costs, which are paid by the person concerned.

Realtor service with payment under an exclusive agreement

There are options when the seller of an apartment has difficulties with the sale. He put up the ad himself and can’t sell it because the apartment is illiquid or has problematic documents. Sometimes the price is set incorrectly and the photos are very bad.

The seller contacts the realtor and signs an exclusive agreement. With this document, he instructs the realtor to sell.

Related article: Exclusive agreement with a realtor for the sale of an apartment

In this case, the realtor’s service is already included in the price of the apartment and the buyer does not officially pay a commission. But still, because of the realtor, the price is inflated by several thousand dollars, which the buyer will pay and the seller will not receive.

But this is payment for the services of a specialist who was needed for the sale to the real estate seller. Everyone must receive their price for services under the contract. The buyer’s task in this option is to buy an apartment at the optimal price for himself.

You must understand that the realtor works for the seller and will defend only his interests, and you must protect and insure yourself as much as possible. Do not trust words, but always check the documents before purchasing and understand the terms of the transaction.

Property sales tax

Certificates from the BTI are inexpensive - within one to two thousand rubles. The size of the property plays a decisive role here: the larger the area of ​​the apartment being sold, the more expensive the certificate will cost. Sometimes it is necessary to obtain other paid certificates from the BTI: compliance with area and address, legality of redevelopment, etc. This is another plus one or two thousand rubles from the home seller.

And the costs for drawing up the purchase and sale agreement itself fall on the buyer of residential real estate. This fact must be indicated in advance, before the buyer makes an advance payment.

Realtor services under agreement with the buyer

Realtors also have an agreement with buyers to provide services. They promise to find an apartment and ask for a 5% commission for this. Those who cannot or do not know how to go online on their own and view apartments for sale can also pay a realtor for the search - this is their right.

In this case, the buyer adds the realtor’s services to the cost of the apartment and pays the commission himself. This is the only time the buyer actually pays a commission to the realtor. In other cases, the seller always pays or partially both parties pay.

If you are forced to pay a commission, then everyone loses, and the intermediary makes money from his imposed services.

Clarification of other difficult points

Dealing with a realtor always has its pitfalls. He may make mistakes. This also indicates his lack of professionalism, since a realtor’s mistakes can be very costly for the client. What mistakes can a realtor make?

• Losing money.
• Waste of time.
• Losing an apartment.

It is best to choose a realtor with a recommendation and experience. Protect yourself, your money and property so as not to fall into the hands of a negligent worker.

Try to choose a specialist who will be your faithful friend and advisor when buying or selling an apartment, because good specialists are very well versed in all the schemes and can spot frauds and scammers in no time. A realtor should inspire your trust, and not the other way around.