BAC, otherwise known as Buyer’s Agent Commission is one of the most important factors that determine your success as a real estate agent, broker, buyer or, seller. There are a lot of people involved in real estate who do not know the meaning of one of the most crucial factors of the industry. They do not know what does BAC means in relation to real estate? 

Whether you are an estate buyer, seller, or a rookie real estate agent, there’s no going unless you know what you are dealing with. And BAC happens to be something you are bound to deal with while selling, purchasing, or representing someone in the business. 

The meaning of BAC in real estate!

That’s the question we shall seek an answer to in this blog. We shall understand what does BAC means in real estate. Let’s also take some time to learn about certain other things concerned around the selling and purchasing of estates. Keeping reading until the end to known all about Buyer’s Agent Commission.

Know the Terms!

Before we get going into discovering the answer to your queries, let’s understand a few terms that we will be coming across in the later sections of the blog. 

  • BAC: As stated above, BAC in real estate stands for Buyer’s Agent Commission. It is the commission earned by the licensed real estate agent for representing the buyer during the real estate transaction. 
  • Seller’s Agent Commission: Similar to BAC, it too is a commission earned via the real estate transaction. It is received by the seller’s agent.
  • Realtor: A Realtor is a licensed real estate agent who represents either the buyer or the seller during the real estate transaction. A realtor is an active member of the National Association of Realtors.
  • Agent: A real estate agent is an individual licensed to represent the selling and purchasing of an estate in a particular area, region, or state. A real estate cannot work individually, he must work under a licensed real estate broker. 
  • Broker: A broker in real estate refers to someone who has a licensed real estate firm. He has several agents working under him. 

What Does BAC Mean in Relation to Real Estate?

Now that you have already come so far in the blog, you must probably have some idea about what does BAC means in Real Estate.

Buyer’s Agent Commission
Buyer’s Agent Commission

While selling or purchasing a home, land, or any sort of estate property, both the buyers and sellers usually seek help from the licensed real estate agents. They do so to make the most out of their real estate transaction. The licensed real estate agents are professionals from the industry who know the local market best. They have great negotiating skills when it comes to selling or buying an estate. Eventually, these agents make the entire process of selling and purchasing lots easier, time-efficient, and of utmost benefit. 

In exchange for their professional skills, these agents charge a certain fee. This fee is what we know as real estate commission. Unlike other middlemen, real estate agents do not charge their clients on a day-to-day basis. They rather, take a cut or share from the sale price of the estate. Often determined by a contract between the agents and the buyers/sellers, the real estate commission is usually somewhere around 5-6% of the sold price of the home. 

Once the transaction completes, the commission is split into two halves as buyer’s agent commission and the seller’s agent commission. However, this split does not directly go to the agents. It first, goes to their listing brokers. The split commission now is again divided between the agent and his listing broker by half or the amount decided. 

Real Estate Commission Simplified

Let’s take an example to understand the exact concept of real estate commission. 

If a home or land is sold for $1,000,000 and the real estate commission is 5% of the sold price. Then the real estate commission of the transaction would be $50,000. The buyer’s agent and seller’s agent split the commission in 50/50. The commission further splits between each agent and his listing broker in half. 

So, at table closing, the commission would be split in the following manner:

Total Commission: $50,000

Buyer’s Agent Commission: $25,000

Seller’s Agent Commission: $25,000

Listing Broker: $12,500 

Selling Broker: $12,500

Buyer’s Agent: $12,500

Seller’s Agent: $12,500

What is the Ideal real Estate Commission?

Whatever the business, commissions are always negotiable. With your negotiation skills and offers, you can bargain and finalize the commission. In real estate, 5-6% of the estate’s (home’s) selling price is usually taken as the standard commission. But, with negotiation, the BAC and seller’s agent commission can fall up to 4%. 

Also, you can only discuss the percentage but not the exact amount of the real estate commission with your agent. It is because the commission is represented in the percentage of the selling price. So, you will not know the exact commission until the offer is accepted or the property is sold.

Who Pays Buyer’s Agent Commission (BAC)? 

Who pay’s the BAC or real estate commission?

That’s quite the trickiest question asked in the industry. Experts say that it is the seller who pays the commission at the end of the real estate transaction. But something behind the curtain happens to seek your attention. 

It is indeed true that the seller pays the real estate commission (BAC and seller’s agent commission). However, he does not exactly pay the same. How do you think this happens?

Here’s an answer!

Just as stated above, the real estate commission is deducted from the price at which the house is sold. It means the seller includes the commission in the price of the estate/home/property he is selling. Also, see that at the table closing, it is the buyer who pays the selling price. Once the buyer pays the money, the property is sold. However, the seller does not receive the entire selling price. He receives the selling amount only after the commission is deducted. It means that the buyer is ultimately the one paying the real estate commission in the transaction.

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