Realtor Fees and Closing Costs

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What is a realtor fee and what are closing costs?  These are two common terms which frequent the real estate community.  Do you know what these two terms mean?  Let us find out about them and also discover who pays the realtor fee and closing costs.

Who pays the house realtor fee?


A realtor fee is a percentage of the sale price which usually ranges from 5% up to 10%.  For a home that would sell for $5,000,000 for example the usual agent’s commission is around $250,000 to as high as $500,000.  This amount is also split into the buyer’s agent and the sellers agent.  A new contract is formed between brokers and not something the buyer can even negotiate as part of the deal.

Seller pays realtors fee thus home buyers are free from them.  Payment of realtor fee is done at the settlement table, and the fee is subtracted from the proceeds of the sale.

If there is a listing broker, the seller pays them the fee.  The listing broker will the share part of the fee to the realtor which in turns bring a buyer to the table.  Listing price of homes includes realtor fees which are also considered as the cost of doing business.  This fee incorporates any agent’s commission which will be paid later on.


What are Closing Costs?

Other fees beside the Realtor fee can be considered as Closing Costs.  These miscellaneous fees could include the following:

  • Loan processing
  • Title company fees
  • Surveyor costs (if needed)
  • Recording of the deed
  • Insurance
  • Any taxes or homeowners association fees, which may need to be prorated if they’re already paid


Closing costs ranges from 2% to 7% of the total home purchase price.  Average percentage of this cost is around 3.5% of the home’s sales price.

In order to make Closing Costs legal and binding, your home realtor or agent needs to provide you with a “Buyer’s Sheet” that contains the closting costs and its amount.  According to federal law you should receive a “good-faith” estimate on your closing cost from any lender you use.

If your closing costs are high, don’t worry because they are negotiable.  Do not let the Realtors or vendors bully you about the prizing.

Agent provides a buyer with a buyer’s sheet which indicates the closing costs, and by federal law you must receive what’s called a “good-faith” estimate of your closing costs from any lender you use.

Unlike Realtor fee, either the buyer or the seller can pay closing costs depending on the negotiation.  In practice, however, the buyer usually gets to pay majority of the costs.  Buyers usually shells out 3% to 4% of the home price and sellers shells out about 1% to 3%

You just learned about two important costs that you should watch in buying your next home or even doing brokerage work.  For more of the latest updates and other information regretting home mortgage, brokers and real estate please follow our Facebook page and Linkedin accounts.


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