Who Is Responsible for Paying Realtor Fees in Ohio?

Understanding the financial aspects of a real estate transaction is a significant consideration for anyone looking to buy or sell a home. Realtor fees represent a substantial portion of these costs, making it important for both buyers and sellers to comprehend how these fees are structured and allocated. Being informed about realtor compensation helps in making sound financial decisions throughout the process.

Understanding Realtor Fees

Realtor fees, commonly known as commissions, are compensation paid to real estate agents for their services in facilitating a home sale. These fees are typically calculated as a percentage of the home’s final sale price. The total commission is generally divided between the listing agent, who represents the seller, and the buyer’s agent, who represents the purchaser. In Ohio, the average total real estate commission can range from 5.6% to 5.87% of the home’s sale price.

These fees cover a wide array of services provided by agents to their clients. For sellers, the listing agent’s work includes marketing the property, conducting showings, advising on pricing strategies, and negotiating offers. Buyer’s agents, conversely, assist their clients by identifying suitable properties, scheduling viewings, providing insights into potential issues, and guiding them through the negotiation and offer process.

Standard Payment Practices in Ohio

Historically, sellers in Ohio typically covered the entire real estate commission, including the fees for both their own agent and the buyer’s agent, out of the sale proceeds. This practice incentivized buyer agents to show properties. However, recent changes stemming from a major lawsuit settlement have altered this traditional approach, impacting how commissions are handled.

As a result of these new rules, sellers now directly pay their listing agent’s commission, which typically averages around 2.92% to 3.14% of the sale price. For the buyer’s agent commission, generally ranging from 2.68% to 2.73%, the buyer and their agent are now required to establish a direct compensation agreement upfront. While the buyer is formally responsible for their agent’s fee, sellers can still choose to offer a concession to cover this cost as part of the negotiation, which can make a property more attractive to potential buyers.

Negotiating Realtor Fees

Realtor fees are not standardized by law and are always open to negotiation between the client and their agent. The average commission rates, while common, serve as a starting point for discussions. Sellers have the opportunity to negotiate a lower commission rate with their listing agent, ideally before signing any listing agreement.

Factors influencing negotiation include current market conditions, such as whether it is a buyer’s or seller’s market, the property’s value, and the agent’s experience level. For instance, a high-value property might warrant a slightly lower percentage due to the larger overall fee generated. Sellers can also discuss the scope of services provided, potentially opting for reduced services in exchange for a lower commission rate. Exploring options like working with discount brokerages or agents who offer pre-negotiated lower rates can also lead to significant savings.

The Payment Process

Realtor fees are not typically paid out-of-pocket by the seller before the sale closes. Instead, these fees are usually deducted from the seller’s proceeds at the time of closing. The title company or closing attorney plays a central role in this process. They are responsible for handling the disbursement of all funds, including the various closing costs and realtor commissions. The closing agent ensures that both the listing brokerage and the buyer’s brokerage receive their respective portions of the agreed-upon commission directly from the sale proceeds.