Who Pays Realtor Fees in Georgia? Buyer or Seller?

Understanding the financial aspects of a real estate transaction, particularly who is responsible for various fees, is important for both buyers and sellers in Georgia. Real estate commissions represent a significant portion of these costs, and their payment structure can sometimes be complex. Gaining clarity on these arrangements before entering the market can help individuals budget effectively and navigate their property transactions with greater confidence. This understanding extends beyond just agent fees to include other expenses that arise during a home sale or purchase.

Standard Commission Payment Structure

Traditionally, in most residential real estate transactions in Georgia, the seller has been responsible for paying the entire real estate commission. This commission, typically a percentage of the home’s final sale price, covers the services of both the seller’s agent (listing agent) and the buyer’s agent. Average real estate commission rates in Georgia range between 5.5% to 6% of the sale price. For example, on a median-priced home of approximately $376,600, the total commission could amount to around $21,165.

Once the total commission is paid by the seller, it is then split between the listing brokerage and the buyer’s brokerage. This split often results in each agent’s brokerage receiving approximately 2.5% to 3% of the sale price. This practice meant that buyers generally did not directly pay a commission to their agent, as their agent’s compensation was derived from the overall commission paid by the seller. However, recent industry changes, such as the National Association of Realtors (NAR) settlement, have introduced shifts, meaning sellers are no longer strictly required to cover the buyer’s agent commission. Despite this, sellers may still choose to offer concessions to cover the buyer’s agent fees, making their home more attractive to potential buyers.

How Real Estate Commissions Are Established

Real estate commission rates in Georgia are not fixed by law and are fully negotiable between the seller and their listing broker. The agreed-upon commission rate is typically a percentage of the final sale price, which is then multiplied by the sale price to determine the total commission amount. Factors influencing this negotiated percentage can include the property type, current market conditions, and the extent of services offered by the agent. For instance, luxury properties might see slightly lower percentages due to their high sale price, while properties in a seller’s market might offer agents more flexibility.

This division is often outlined in the Multiple Listing Service (MLS) offer of compensation, which indicates the portion of the total commission that will be paid to the buyer’s agent’s brokerage. While the seller agrees to pay a comprehensive commission, a specified portion of this amount is allocated for the buyer’s agent, incentivizing buyer agents to show the property to their clients.

Buyer-Side Commission Agreements

While the traditional model saw sellers covering both agent commissions, there are scenarios where a buyer in Georgia might become responsible for paying their real estate agent’s commission, either entirely or in part. This shift is becoming more common, especially with recent changes in real estate practices. One such scenario involves a buyer signing a specific buyer representation agreement that includes a direct compensation clause. This agreement formally obligates the buyer to pay their agent’s fee, ensuring transparency about the buyer’s financial responsibility.

Another situation arises when the commission offered by the seller to the buyer’s agent is less than what the buyer’s agent charges as per their agreement with the buyer. In such cases, the buyer might be required to cover the difference. Buyers could also directly compensate their agents through alternative structures, such as flat fees or hourly rates, rather than a percentage-based commission.

Other Associated Real Estate Costs in Georgia

Beyond real estate agent commissions, both buyers and sellers incur various other costs during a real estate transaction in Georgia, often referred to as closing costs. These expenses are distinct from the agent’s fees and contribute to the overall financial outlay of buying or selling a home.

For buyers, common costs include loan origination fees, which typically range from 0.5% to 1% of the loan amount, and appraisal fees, usually between $300 and $500. Buyers also pay for home inspection fees, which can be around $300 to $600, and lender’s title insurance, a requirement by most mortgage lenders to protect their investment. Attorney fees, necessary for closing in Georgia, and recording fees for official documentation are also customary buyer expenses. Prorated property taxes and homeowners insurance premiums are additional costs buyers might pay at closing.

Sellers also face a range of closing costs that are typically deducted from the proceeds of the sale. A notable expense for sellers is the Georgia real estate transfer tax, levied at a rate of $1 for every $1,000 of the sale price, plus an additional $0.10 for each $100. For example, a $400,000 property would incur a $400 transfer tax. Sellers may also pay attorney fees, often ranging from $500 to $1,500, for preparing necessary deeds and documents. Other potential costs for sellers include prorated property taxes, homeowners association (HOA) transfer fees, and any negotiated repair costs or credits agreed upon during negotiations.