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Re: How do brokers get paid?...
That's correct. The seller negotiates a commission with the listing agent at the time the agent takes the listing. Then, the listing agent offers out a percentage of that commission to a buyer's agent or broker's agent (two different types of relationships, but both work with the buyer). Usually, the listing agent offers out 2% to any agent who brings the buyer (that's the standard percentage on LI). For example, if the listing agent takes a listing at 5%, he or she will give 2% of that to the agent who has the buyer and keep 3%. But the overall commission is between the seller and the listing agent, and the split is between the agents, so the buyer doesn't need to really worry about any of it.
When the deal closes, the commission comes out of the seller's proceeds. The seller's attorney will distribute checks to both agents at the closing table.
Sometimes, if a buyer chooses to engage an agent as a buyer's broker (to have that agent represent the buyer's interests, not the seller's, which is always a good idea), the buyer will agree that the agent will get more than 2% as commission -- usually 3% (because a buyer's broker is doing more due diligence and taking on more liabilities). So in rare instances, the buyer may need to kick in an extra 1%, but again, most of the time it the offer is presented and negotiated such that the buyer's agent's commission comes out of the seller's proceeds, not out of the buyer's pocket.
And most people don't hire a buyer's broker, but rather work with an agent in a traditional relationship (agent works with buyer but still owes all fiduciary duties to the seller). That doesn't really make sense, but Long Island is one the few areas of the country where buyer brokerage hasn't really caught on.
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