This is sure to spark some debate.
I am in the camp that believes that broker's fees and/or commissions are paid "from the proceeds of the transaction."
On the one hand, the Seller often contracts with a Listing Brokerage to pay a specific commission. Often, that commission includes a co-op fee for a Buyer's Agent.
At Settlement, the Seller is often charged those fees. But in most cases, it was the Buyer who paid the Seller an agreeable price allowing the Seller to cover those fees. So, it could be said that it is the Buyer who gives the Seller the money to pay those fees.
Then again, consider the Seller who has enough cash or possibly equity, that they pay those fees without using the Buyer's money.
And, for example, there may be a For Sale By Owner who is unwilling to pay any fees to any agent. The Buyer may then pay those fees themselves.
Who do you believe ultimately pays the fees? How does it work in your state? As a Buyer's Agent, do your clients ever pay you directly? If so, what happens to the co-op fee being offered by the Seller?
When representing a Buyer on a For Sale By Owner purchase, do you discount the market analysis to show the Buyer what the market value of the home should be without real estate fees?
Would you consider market value to be a discount of the total amount of fees from both sides of the transaction, or just the amount that your client would be responsible to you for?
Since this is an active network, I thought I would throw this one out there to see the different responses.
From a Listing Agents point of view: Buyers pay for everything, even when they get concessions for closing help from the Seller at settlement, they still have to finance the credit they got from the Seller. I don't like to tell my sellers that they are paying for anything, because it makes them not want to pay it, no matter what it is! I call it a "credit at closing". This way I find it more palatable to a Seller.
I agree it is the Sellers that pay the commissions. They agreed to pay X amount to market the house and X amount to offer to Buyer's Agents to get the home sold. It comes out of the sellers proceeds. Think about it this way. The home is worth X amount no matter what the net bottom line is to the seller. The buyer will pay X amount, no matter what the net bottom line is to the seller. If the buyers were paying the commission, it would be $X for the house PLUS X% for commission to the buyers agent.
I know it can be argued both ways, but it's not marketed both ways. Homes are marketed for sale at $X and from the proceeds commissions are paid (or not in the case of FSBO's).
Benjamin,
I tell all of my buyer clients that when they purchase a listed home, they are paying for representation. It is up to them as to whether or not they get it. Buyer's need to be empowered to understand that they actually can control their own destiny when it comes to representation!