Good morning. When I started as a real estate agent, I was trained to tell buyers my services were "free" because the seller pays my commission. Even today, most buyer agents still use this line.
But let's think about this logically: If the buyer's money funds the purchase, and the seller pays commissions from those proceeds, who's really paying the buyer agent?
Here's what actually happens: You find a house listed at $500,000. The seller has already factored in paying a buyer agent 2.8% ($14,000) when they set that price. When you buy the house, your money pays the seller, who then pays your "free" agent.
If you're getting a mortgage, you're effectively financing that commission over 30 years. That $14,000 becomes part of your loan balance, adding interest costs throughout the life of your mortgage.
The Commission-Per-Hour Reality
Traditional buyer agents earn the same 2.8% whether they work 10 hours or 50 hours with you. Here's what this looks like in practice: A buyer looks at one house, the agent works 25 total hours from start to close on a $500,000 purchase. That's $14,000 for 25 hours of work - or $560 per hour. I've seen scenarios where agents make $1,000+ per hour when buyers find their perfect house quickly. Meanwhile, you're told this arrangement benefits you because it's "free" or "the seller's paying."
Why This System Persists
When you're ready to buy a house, you'll almost always be told you need a buyer agent. If you're not convinced immediately, the outdated traditional two-agent commission system will steer you toward one anyway.
Major listing platforms like Zillow and Redfin deliberately hide the listing agent's contact information—you know, the actual source who was hired to sell the house—and instead push you toward their "Schedule a Tour" buttons. They then sell your information to random agents who will try to lock you into traditional commission structures.
There's also the common family or friend referral insisting you 'have to work with their agent because they're the best,' not knowing they're steering you into the same inflated commission structure. Even agent-to-agent referrals come with their own commission markup issues that further inflate your costs. I covered this specific tactic and how to flip it to your advantage in this video - it's worth understanding before you get caught overpaying by 25%.
This artificial complexity serves the industry perfectly. When more agents get involved in each transaction, brokerages profit more while buyers and sellers shoulder the inflated costs.