Who should pay for realtor services when selling and renting real estate
The sale or lease of real estate is often accompanied by the involvement of a realtor, a specialist who helps the parties to conclude a transaction faster and with less risk. The question often arises as to who should pay for the realtor's services - the seller or the buyer, the landlord or the tenant? It is not possible to find a clear answer to this question in the legal framework. How this happens in practice often depends on the region of Ukraine, the format of the transaction and the agreements between the parties.
In this article, we will look at who usually pays a realtor for what when selling and renting real estate, what it depends on, and how the agent's commission is formed.
Realtor services: what the client pays for
The work of a realtor is not just showing real estate or placing ads. In fact, it is a whole range of services aimed at making a safe and profitable deal. Payment for realtor services covers not only their time, but also their expertise, experience, and responsibility for the process.
Here is what is usually included in the services of a realtor and what the client pays for:
Market analysis - the agent assesses the value of the property when selling or renting an apartment, focusing on current prices and trends, so that the client does not sell cheaper or rent more expensive housing than it actually costs;
search and selection of objects or potential buyers/tenants - a realtor selects options that meet the client's requirements or looks for interested parties for a particular object;
arranging viewings - the agent arranges viewings, conducts them or accompanies the client, and answers questions;
verification of documents - a realtor checks the title documents of the seller or landlord to avoid risks and fraud;
transaction support - the agent prepares documents, advises on the terms of the contract, coordinates the actions of the notary and mutual settlements.
The list of services may vary depending on the format of cooperation and the chosen agency.
Who pays for realtor services when renting real estate
When it comes to renting a home, there is often confusion as to who should pay for the services of a realtor - the landlord or the tenant? In Ukrainian practice, there is no single standard, so it often depends on the specific situation and the agreements between the parties.
In fact, most often the tenant pays the realtor's commission. This is because it is the tenant who contacts the agency with a specific request, and the realtor spends time searching for options, organizing viewings, and checking the property owner's documents. Usually, the commission amount is 50% of the monthly rent.
In some cases, the realtor works for the owner of the property: in this case, the landlord pays the commission. This happens when the apartment owner orders the service of finding a reliable tenant, delegates showings, advertising the property, screening candidates, etc.
The main rule is that whoever orders the service pays for it. However, since this issue is not strictly regulated by law, everything is decided in the course of negotiations and recorded in the contract for the provision of real estate agency services.
Who pays a realtor when selling real estate
As in the case of renting a home, the law does not oblige any one party to pay the realtor's commission. Most often, everything is decided by agreement, but in practice, different options are possible.
The most common situation is when a realtor works in favor of the seller: they determine the market value of the property, organize showings, negotiate, and help prepare documents for the sale of the apartment. In this case, the seller has to pay for the agent's services, since it is the seller who orders the service and uses it.
However, there are also situations when a realtor accompanies the buyer: they look for suitable offers in accordance with the request, check the documents of the property owner, and help to finalize the transaction. Logically, the buyer pays the commission in this case.
It is not uncommon for each party to engage its own agent. In this case, the buyer pays his realtor, and the seller pays his own. It also happens that someone offers to split the costs in half, especially if both parties are equally interested in a successful transaction.
In Ukraine, it is a common practice to shift the cost of a realtor's work to the buyer. As a result, the buyer pays the commission, but it is often the seller who loses money, as they are asked to make a discount on this amount. As a result, the buyer paid the commission, but the seller did not receive the amount for the sold property. In this case, it makes sense to consider splitting the costs.
The amount of a realtor's commission: how it is formed and who sets it
A realtor's commission is a remuneration for services rendered. Its size is not regulated at the state level, i.e. there are no legally fixed rates, so the amount of the commission is formed depending on the policy of a particular agency and on the basis of agreements between the agent and the client.
When renting a home, the commission is usually 50% of the cost of one month's rent, although there are cases when a realtor takes 100%. When selling real estate, the commission ranges from 2% to 5% of the transaction amount, depending on the property, region, and scope of work.
The following factors may affect the amount of a realtor's commission
type of real estate - residential, commercial, secondary market, new building;
price of the object - sometimes the percentage of commission is lower if the transaction amount is substantial;
the number and complexity of related services - selection of objects, legal support, negotiations, verification of documents, etc;
level of competition in the market - in large cities, the rate may be lower due to the large number of agents;
reputation and experience of the realtor - professionals with good reviews and a stable client base can charge higher fees for their services.
The commission is set by the agency or an independent realtor, but it is always discussed with the client in advance. In order to protect your interests and avoid misunderstandings, it is best to immediately fix the amount of commission and the list of agent services in the contract.
Is it possible to do without a realtor
It is quite possible to rent, lease, buy, or sell real estate without the involvement of a realtor. But it is important to weigh the pros and cons of this decision.
Sellers and landlords who have experience in real estate and who have already conducted similar transactions can do without the help of a realtor. It is also important to understand that you will have to spend time and effort on advertising the property, showing it, and preparing documents. Even those who already have a reliable buyer or tenant among their friends do not have to use the services of a realtor.
What difficulties can arise without a realtor?
Incorrect pricing - without market analysis, it is easy to set a price that will repel potential customers or be unprofitable for the property owner;
legal risks - improper paperwork can lead to loss of money or litigation;
time costs - searching for buyers or tenants, selecting properties for purchase or lease, organizing showings, and checking documents takes a lot of time and effort;
fraud - especially relevant in the case of renting, when fraudsters can act both on the part of tenants and "owners".
If you have the knowledge, time, and desire to control the process, it is quite possible to look for an object or a client on your own. But when it comes to expensive real estate, complex legal nuances, or a desire to avoid unnecessary risks, engaging a realtor is an investment in the safety and efficiency of the transaction.
Mayak Real Estate Agency employs professionals who are ready to assist in the rental and sale of real estate in Kyiv and Kyiv region. The agency operates on the principle that the commission is paid by the person who orders the service, because it is fair and just.
