Is commission included in closing costs?
Technically, an agent’s commission is not included in a home’s closing costs. Closing costs are an assortment of fees, separate from agent commissions, that must be paid at closing. Closing costs typically include things like taxes, title insurance, appraisal, lender fees, and other services carried out during closing.
Closing cost amounts vary depending on the buyer's loan program, but they usually total 2%–5% of the home's purchase price.
Do you have to pay commission if your home doesn’t sell?
Short answer: Probably not. Real estate agents are paid when you sell your home, so if your home doesn’t sell, you shouldn’t owe them a commission.
Long answer: Read the fine print. Generally, your contract with your agent is bound to a certain time period. Unless your contract says otherwise, you are typically not required to pay your selling agent if the contract expires and your home doesn’t sell. However, there may be some exceptions, such as:
- Your agent found the buyer: Some contracts state that you still owe your agent commission after the contract period ends if your buyer was a prospect during the term of the agent’s contract.
- You back out of the sale: After an offer is accepted, you are responsible for paying commission to both real estate agents immediately. If you decide to back out of the sale last minute, you still have to pay both real estate agents their commission. If the buyer backs out, you may still be responsible for paying the commission — but can potentially sue the buyer for breach of contract.