Who pays for realtor services and why. Detailed analysis

April 19, 2021 GetHom expert 58,642

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 to earn more

There are methods that will help make income more stable for everyone: both for private traders and for agency employees. The point is to find new sources of income while remaining a realtor.

Offer related services

A realtor makes money thanks to his gift of persuasion. Convince the client to purchase additional useful services. For example, checking the history of an apartment for legal purity or assessing the real price of the property so that the client does not underprice or, on the contrary, does not raise the bar.

We have compiled a list of additional services that you can offer to the client and increase the cost of the transaction:

Check the history of the apartment and the legal purity of documents;
Assess the investment attractiveness of the object;
Help with registration and registration;
Help in obtaining a mortgage or loan;
Analyze the real estate market;
Take upon yourself to resolve a difficult situation (for example, help a client’s lawyer in formalizing the division of property during a divorce or if the owner of an apartment is declared incompetent).

Start collaborating with partners

There are services that are not directly related to the responsibilities of a realtor. For example, after buying an apartment, a client wants to make repairs, or the apartment needs to be thoroughly cleaned before showing it so that it does not fall in price. The broker does not do all this, but nothing prevents him from offering such services to his clients. This requires partners.

Partners receive new clients from you, you from partners receive a certain cashback, and your clients receive a more comfortable package of services.

Who can be a partner:

Mortgage broker;
Insurance Company;
Legal consultation;
Cleaning company;
Interior designer;
Repair team;
Manufacturers of furniture and kitchen equipment;
Hotels (for clients who come from other cities or countries).

Automate your work

You can increase your earnings using a CRM system. It’s not for nothing that two thirds of Russian companies have already implemented it or are planning to implement it. The program helps you earn more due to the fact that employees complete tasks faster, do not miss deadlines, do not lose applications, and process them before the client leaves for competitors.

Read on topic Do you want to know why a realtor needs a CRM system? In our blog, we described what problems this program solves and how it increases productivity.

Among the many CRMs, it is worth paying attention to programs designed specifically for realtors. For example, an industry-specific offer from SalesapCRM will make your life easier and help you earn more without being distracted by routine.

What the program does:

Stores all objects in a single database and automatically selects suitable real estate based on the client’s request;
Creates documents using templates in a second;
Creates a PDF presentation of an object in just one click;
Captures applications from the website and mail and automatically assigns tasks so that you do not forget a single client;
Automatically generates reports on clients, applications, transactions and profits and displays them online directly on the desktop;
Automatically publishes ads to 213 real estate sites so you don't waste any more time on it.

This is how ads from SalesapCRM are uploaded to 189 real estate sites in just 10 seconds.
Read on topic Are you still unsure whether to work in Excel or switch to CRM? For you, we compared the programs and described the pros and cons of Excel spreadsheets and CRM programs in one article.

So, is it really possible to make money as a realtor? Yes, but in the first months there may be no money at all. To reach a normal financial level, beginners need to look for agencies with training. More experienced brokers should offer more services, look for partners and learn new business programs.

Back to Contents

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.

Why does a seller need a realtor?

Owners of apartments and houses more often seek help when selling: this is due to the large supply on the market. To ensure that the seller’s advertisement does not get lost among similar options, it must be presented correctly - this is what realtors do.

Agents provide:

photographing the object of sale;
preparation and placement of advertisements;
checking the “legal purity” of real estate;
consultations on all emerging issues;
preparation of a purchase and sale agreement;
optimal settlement conditions between the parties to the transaction.

The agent also facilitates the signing of the contract and submits it for state registration.

Who pays the realtor when selling an apartment? If the seller contacts a specialist, the customer pays for the service. The agent and the seller agree on the fee in advance: details of the rate, fixed fee or commission percentage and terms should be specified in the contract.

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.

Choosing a real estate agency

The market for real estate services is replete with a large number of offers; in order to choose a reliable and high-quality agency that can organize a successful transaction, the buyer must determine the priority points that need to be given special attention, usually these are:

Period of operation of the agency. Extensive experience characterizes the organization as an experienced and successful representative of services in the field of home sales.
Number of company employees. A large staff indicates the development and stability of the agency.
Prices for services. Typically, the cost of real estate agency services is approximately the same. However, if the price is clearly too low, then this should alert the client.
Official website of the organization. A company that cares about its image carries out careful work on the website; it should be rich in information about contacts, employees, organizational documents, objects and offers of realtors.
Agency office . The location, interior design, and advertising signs of the premises play an important role, since there are frequent cases of the creation of fly-by-night companies.
Social activities, that is, membership in various associations, for example, the Russian Guild of Realtors (RGR). The presence of a certificate from this type of association allows clients to verify the high professional training of workers who, in order to obtain a document, must undergo training and pass an exam.
Availability of various awards, certificates (diploma for active development of the mortgage market, letter of gratitude for legal support of public activities of the RGR).
Reviews about the organization of realtors . It will be useful for the buyer to find out other people’s opinions about the company and visit various Internet portals and forums.

If an agency has relatively little experience in the real estate market, this is not always an indicator of the company’s unreliability; it is important to pay attention to the reputation and professionalism of the company’s employees.

How to check a real estate agency for cleanliness?

Before contacting this or that agency, you should make sure that your choice is correct; for this, the buyer must:

Check company documents. You need to make sure whether the organization has the necessary certificates, attestations, and request an extract from the Unified State Register of Legal Entities (USRLE).
Contact the tax authority, arbitration court, to determine whether the company has violated the law or is not bankrupt.
As a realtor, you need to check the employment contract with the agency he represents.
Particular attention should be paid to the contract that the buyer enters into with the company. The conclusion of a written document that meets all legal requirements guarantees the legal purity of the transaction .
It is important to clarify whether the agency checks the history of the proposed apartments, the powers of the owners, and the authenticity of the information. Usually there is a lawyer on staff who performs such actions.

Example

Citizen B, in order to buy an apartment, turned to a real estate agency that recently opened near her home. The realtor, without concluding a contract, immediately offered a housing option. The client liked the apartment, she made the payment and completed the necessary documents.

Citizen B moved to a new address, but two weeks later Citizen R came to her apartment, claiming that he was the real owner of the premises. Having gone to court, it turned out that the agency acted according to a criminal scheme, with the help of forged documents, false forms, seals and a fake notary, they executed an agreement for the sale and purchase of an apartment that they rented from Citizen R. The court determined that Citizen B does not have legal rights to housing, and to protect her interests she needs to apply to the judiciary.

You can check a real estate agency yourself or by contacting notaries or lawyers , which of course will require additional financial costs, but will most likely guarantee the reliability of the buyer’s choice.

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.

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.

What to look for when choosing an apartment?

When choosing a property, agencies should be based on the capabilities and preferences of their client. There are main points that a realtor pays close attention to:

Real estate value.
Availability of transport links, proximity to a stop.
Arrangement of the yard area, presence of a children's playground.
Technical condition of the house, entrance, proper operation of the garbage chute, elevator.
Housing layout, view from the window.
Interior furnishings of the apartment, external defects, quality of plumbing, serviceability of water supply, heating system, electrical networks.
Infrastructure of the area (kindergartens, schools, hospitals, pharmacies, shops, etc.).
The floor on which the apartment is located.
Residents of the house, their social status.
Year of construction, type of property (brick, panel, monolith).
Ecological condition of the area, proximity to factories, airports, landfills.

The acceptability of the cost of the selected object can be assessed by the realtor himself.

For a more accurate determination, it is worth contacting professional appraisers to be sure that the price of housing is not inflated.

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.

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.

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.

How much does a realtor earn on average in Russia?

To find out how realtors earn money in Russian regions, we selected 4 cities with the highest level of economic development and 4 cities with less developed economies:

Moscow, St. Petersburg, Kazan, Krasnodar
Samara, Astrakhan, Volgograd, Yakutsk

We studied vacancies in these cities through recruiting sites (Hh.ru, Superjob.ru and Gorodrabot.ru) and it turned out that the realtor’s salary is directly affected by the economic development of the city: the minimum salary in Moscow or St. Petersburg is equal to the maximum earnings from Volgograd or Yakutsk . We compared the maximum salaries of agents in the regions and got the following range:

Maximum salaries for realtors in Russia

The difference in minimum and maximum wages is huge. Why is that? We studied the opinions of experts on specialized sites and it turned out that it is not easy to earn a lot in this profession.

The indicated salary is not a fixed salary, but a commission from the total amount that the realtor takes. And this is 3-6% of the transaction amount when selling an object and 50-100% when renting. Agencies do not promise a permanent salary: a realtor’s income depends only on how many transactions he closes. If the month is bad and there are no deals, the agency does not pay anything.

At the same time, if you have just entered the profession and are afraid to take risks, then at first, instead of buying and selling, you should start renting. There the income is more regular.

Ilya Shkop, Chairman of the Council of the Moscow Guild of Realtors for the CIAN forum: - Entry into the specialty for beginners lasts from 6 to 18 months, depending on skills and diligence. You can earn more on sales than on rent. But it will take longer. For example, in Moscow, a novice agent after 2-3 years of hard work can receive 150,000 rubles. per month. But rent will allow you to receive regular income within a month. This is potentially less income than in sales, but more regular.

Conclusion. It is impossible to give the only correct answer to how much realtors earn for the sale and rental of apartments: income depends on the region, and on experience, and on the type of transactions.

Back to Contents

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 responsibility does a realtor have?

All obligations of the real estate agent must be specified in the contract, otherwise the customer will not be able to demand their fulfillment.

A realtor's responsibilities include:

selection of suitable options for those wishing to purchase real estate and search for buyers for the seller;
providing information about the property;
conducting a legal examination of the object;
consulting services;
execution of a purchase and sale agreement;
assistance in organizing payment for the transaction.

The realtor is responsible only for his part of the work, and is not responsible for the failure of the transaction due to the fault of the buyer or seller.

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.

Agreement "on the shore"

To avoid any conflicts and misunderstandings, it is important to draw up an agreement with the agent in as much detail as possible. In the clause on payment for services, it is important to indicate the cost of the work, the moment of calculation, as well as all the conditions for payment of the deposit or advance and its “fate” in the event of early termination of the contract or failure of the transaction.

The realtor, for his part, must accompany the client at all stages of concluding a purchase and sale agreement and control the transfer of ownership of the property.
When cooperation with an agent is properly organized, the specialist does his job well, and the customer does not mind parting with money to pay for his services. Submitting ads to 200+ sites in one click

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.

When should you pay a realtor?

All details of the real estate agent's fees must be included in the contract.

There are several options for when to pay for realtor services:

in parts at each stage - this option is the most successful if the customer wants to terminate the contract early;
after signing the contract;
after completion of all stages of the transaction - transfer of ownership rights.

It is most reliable to agree in advance on payment at the time of complete completion of the case. If a realtor works on the seller's side, it is better that he receives a reward after the buyer has settled. If the agent represents the interests of the buyer, the transaction is considered completed after the official transfer of ownership - receipt of documents from Rosreestr.

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.