When a house is being bought or sold, two of the terms often argued about are realtor fees and closing costs. To a first-time buyer or seller, these terms might be unclear, especially when one is trying to determine who should pay what. One thing we are often asked is, “Are realtor fees included in closing costs?” This blog will explain what realtor fees and closing costs are, and whether the two are one and the same.
What Are Realtor Fees?
Realtor fees are the commission to the real estate agents who are making the transaction. The fee is usually a percentage of the final sale price of the home, usually about 5-6%, although it could be different based on the market or your deal with your agent. The commission is typically shared between the buyer’s agent and the seller’s agent.
It is wise to know who pays realtor commissions. Almost always, it is the seller who pays such charges out of the sale proceeds. Take, for example, a house that sells at $300,000 and upon which a negotiated commission of 3% is agreed. The seller would pay $9,000. This amount is then divided among the agents on each side of the sale.
Are Realtor Fees Included in Closing Costs?
Here’s the short answer, no, realtor fees are not included in closing costs. They’re two different charges, and being aware of the difference will better equip you for the financial aspects of your transaction.
Closing costs are the additional fees incurred when acquiring or selling a house. They include fees like loan origination, title insurance, property taxes, escrow fees, etc. These typically run between 2-5% of the home’s purchase price and are to be paid at closing. While most of the closing costs are paid by the buyers, sellers also incur closing costs, such as the transfer of title fees or prorated property taxes.
Do closing costs include realtor fees? In truth, these are two different fees, and your realtor will explain everything for you.
Working with a Reliable Realtor
Choosing the right real estate agent in OKC can be the key to successfully comprehending the cost factors involved in buying or selling a property. A professional and reliable agent will give transparency of fees, dissect all the costs clearly, and help you budget appropriately. They can also negotiate on more favorable terms, making your realtor commissions and closing charges aligned with your goals.
If you’re buying, they will outline what you need to do at closing. If you’re selling, they will lay out the expenses you’ll encounter, including the commission and how much proceeds you can expect after the sale.
Final Thoughts
You need to understand how realtor fees vary from closing costs in order to effectively plan finances when selling or purchasing a property. The seller would typically pay for realtor fees from the settlement proceeds, while closing costs are unique and are divided between sellers and buyers based on circumstances.
Regardless of whether you’re starting your real estate career or preparing to close, working with an experienced realtor will give you the confidence and knowledge to move forward. If you’re wondering “is realtor commission included in closing costs?”, knowing the distinction can help you plan better for the financial aspects of your transaction.