Do You Pay a Realtor If You Don’t Buy a House?

Navigating real estate transactions often raises questions about professional fees, particularly whether a buyer incurs costs for a realtor’s services if a home purchase does not materialize. It is a common misconception that buyers directly pay their real estate agents out-of-pocket. Understanding the typical compensation structure for real estate professionals is important for anyone engaging in the home-buying process.

How Realtor Compensation Works

Real estate agents earn income through commissions, a percentage of a home’s final sale price. Historically, sellers paid the entire commission, split between the listing and buyer’s agents. This traditional model typically involved total commissions of 5% to 6%, with the buyer’s agent receiving about half.

Recent changes, particularly in 2024, have shifted how buyer’s agents receive compensation. Buyers are now often directly responsible for negotiating and paying their agent’s fee. While overall commissions remain negotiable, buyer’s agent compensation is no longer automatically included in seller-paid commissions. However, sellers may still offer concessions or credits that can be applied towards these fees.

When a Buyer Might Owe a Realtor

There are specific, less common circumstances where a homebuyer could become directly liable for their realtor’s compensation. These situations primarily arise from the terms outlined in a buyer-broker agreement, also known as a buyer representation agreement. This contract formally establishes the relationship between a buyer and their real estate agent, detailing the services provided and compensation arrangements.

Retainer Fees

Retainer fees are upfront payments made by the buyer to the agent. While often credited against future commissions, some agreements specify these fees as non-refundable, compensating the agent for their time and resources regardless of a successful purchase. These fees can vary, from a few hundred to a few thousand dollars, depending on the market and the agent’s services.

Cancellation Fees

Buyer-broker agreements may stipulate cancellation fees if the buyer prematurely terminates the agreement. These fees cover the agent’s invested time and expenses, including marketing efforts or property showings. They are typically applicable if the buyer unilaterally ends the agreement without cause.

Success Fees for Unlisted Properties

A buyer might owe a success fee for unlisted properties. If an agent helps a buyer acquire a property not publicly listed, such as a “for sale by owner” (FSBO) home, the buyer-broker agreement may obligate the buyer to pay the agent directly if the seller refuses to pay a commission.

Breach of Contract

A buyer could face liability for breach of contract if they violate an exclusive buyer-broker agreement. For example, if a buyer purchases a property independently or through another agent during the exclusive agreement’s term, they might be contractually obligated to pay their original agent the agreed-upon commission.

Common Scenarios Without Buyer Payment

In most typical engagements, a homebuyer does not owe their realtor any direct payment if a purchase is not completed. An agent’s compensation is contingent on a successful sale closing. Therefore, if a transaction does not reach completion, the agent typically does not receive a commission.

Agreement Expiration or Mutual Termination

If a buyer-broker agreement expires naturally or is mutually terminated before a home is purchased, the buyer generally has no further financial obligation to the agent. These agreements typically have defined terms and expiration dates, after which the client is free to engage with other agents or cease their home search.

Deal Falls Through

When a deal falls through due to factors outside the buyer’s control, such as financing issues, negative inspection results, or a low appraisal, the buyer usually does not owe the agent a commission. These are common contingencies in real estate contracts, and their failure typically nullifies the transaction without fault to the buyer.

No Exclusive Agreement

If a buyer works with an agent without an exclusive agreement, or without any formal written agreement, they typically incur no payment obligation if they decide not to buy a home or find one independently. Many agents work on a non-exclusive basis, understanding their compensation is earned only upon a successful closing.