You've probably heard a buyer agent costs you nothing, the seller pays it. That's how the check gets written. It's not how the money actually works.
Before a buyer or a buyer agent even exists, a seller sits down with a listing agent. That listing agent sets a commission high enough to also pay a buyer agent later, usually 2.5% to 3% of the purchase price. On a $450,000 home, that's $11,250 to $13,500. This gets locked in before the home is even listed, and it's rarely disclosed on past sales, so nobody pricing a new listing has a clear picture of what's fair.
That cost gets built into the price you finance. Finance the purchase, and you're paying interest on that commission too, for as long as you hold the loan.
Paying cash skips the interest, but not the cost itself. A cash buyer still funds whatever commission got built into the price, with no built-in way to negotiate it down or claim a rebate unless they know to negotiate one before signing a contract.
The seller is paying for an agent who doesn't work for them, someone who will negotiate against the seller's own interest once a buyer shows up. The seller could instead price the home on its value alone, and let a buyer who wants their own agent factor that cost into their own offer. This isn't any single agent's fault, it's how the brokerage industry built the system, and buyers who understand it are in a position to help push agents toward a more transparent way of working, which benefits agents too.
None of this means avoid a buyer agent. It means understanding what fair compensation for competent work actually looks like before you sign anything.
The most common version of a fair model works like this: the agent tracks their real hours worked, negotiates the standard 2.5-3% with the seller like any agent would, and a few days before closing adds up their actual time, plus a small buffer for the final walkthrough and closing itself. Whatever's left over from what the seller offered gets rebated back to the buyer. A typical deal runs 15-25 hours of real agent time, more if it's complex or you need extra hand-holding. As the market shifts, expect agent compensation models to shift with it.
The current system has agents working for free unless you buy. Only when a sale closes does the agent get paid, and even then, the brokerage takes its own cut of that compensation before the agent does. That's not fair to an agent doing real, competent work. Doing right by your agent means being ready to pay them directly for time already spent if you don't end up closing, since there's no seller-funded compensation to draw from unless a sale actually happens.
💡 Coming up next: the exact formula for calculating your own rebate, and what you can do yourself to bring the hours down.