Typically, in the U.S., buyer- and seller- agents (or Realtors) acquire their commission from the purchase price. If you don't have a seller-agent, then that commission is not paid. Example:
You list the house at $200,000. Standard commission values are 3/2%, which means 3% for the first $100,000, 2% thereafter. Sometimes they're 3/1.5% or 3/1%, but usually 3/something.
If I offer you $200,000 and you accept, we close, and I used a buying agent, my agent will be paid 3% of the first $100,000, then 2% thereafter (in our example):
$ 100 000 00
x 3 00 %
===============
$ 3 000 00
$ 100 000 00
x 2 00 %
===============
2 000 00
$ 3 000 00
+ 2 000 00
=============
$ 5 000 00
Now, commission is almost always paid out of the seller-end, that is, you will receive the value of your house less the commission:
$ 200 000 00
- 5 000 00
=============
$ 195 000 00
This means, in our example, you would receive $195,000.
To make matters more complicated, a buyer is authorized (read: legally permitted) to ask you for up to 3% of the total sale price for "seller concessions" -- closing costs1 (most states cap this at 3%). That means, in this scenario, if you accept my offer, I do not use an agent, but I asked for 3% to closing costs, you would receive $194,000:
$ 200 000 00
x 3 00 %
===============
$ 6 000 00
$ 200 000 00
- 6 000 00
=============
$ 194 000 00
Now here's where the math gets tricky: if I use an agent and you give me 3% to closing costs, there are two ways the math works out:
You receive $189,000: value less commission less closing costs:
$ 200 000 00
- 5 000 00 (Commission)
- 6 000 00 (Closing Costs)
=============
$ 189 000 00
You receive $189,120: value less closing costs, then calculate and less commission:
$ 200 000 00
- 6 000 00 (Closing Costs)
=============
$ 194 000 00 (New Commission Price)
$ 100 000 00 (New 3% Commission Value)
x 3 00 %
===============
$ 6 000 00
$ 94 000 00 (New 2% Commission Value)
x 2 00 %
===============
$ 1 880 00
$ 194 000 00 (Keep the new value)
- 3 000 00 (New 3% Commission)
- 1 880 00 (New 2% Commission)
=============
$ 189 120 00
So, when you list the house, take these into account. Assume you'll lose about 6% or so of the value (in the $200,000 case, we lost about $11,000, or about 5.5%, but for smaller prices the ratio will be higher). As a result, if you want a value out of the house, list it at least 6% higher. If you're using a realtor / agent, they'll handle this for you and typically use 9-12%.
If we wanted $200,000 from our house, assuming the worst-case scenarios, we'd want to list it around $211,579, which would give us $6,347.37 in closing costs, and $5,231.58 in commission, so about $200,000.05 in the end.
Basic formulas:
- Commission at 2%, sale > $100,000:
salePrice * 0.02 + 1000;
- Closing Costs of 3%:
salePrice * 0.03;
- Find out what you'd "get" (2%, sale > $100,000):
salePrice * 0.95 - 1000;
- If you know you want "X", 3/2% commission, and 3% closings, find out what the offer must be:
(whatYouNeed + 1000) / 0.95;
Basically: make sure you read and understand the contract the buyer (or buying-agent) is providing. If this is a non-typical commission agreement, that contract will state as such (and tell you that the buyer does not want you to pay the commission). There's no law that says "who" has to pay it, just that it may be an included component. It's possible that in your scenario the agent will offer you less, it's also possible the agent will offer what you ask, and inflate the price to potential buyers. There are a lot of scenarios here.
Additionally, some notes on Florida law, which seem reasonable and the source seems credible: https://www.floridarealtors.org/NewsAndEvents/article.cfm?id=367168
Question: I have a listing that was only on the market a couple days when three offers came in. The seller accepted one of the offers. Now the broker who represents the buyer whose offer arrived first claims my seller had an obligation to negotiate with his buyer because his offer was presented to the seller first. Is this true?
Answer: No. There is no Florida law that would require the seller to respond to any offer. In addition, no Florida law requires the seller to negotiate with each buyer in the order in which offers were received.
In your state (and mine) there are laws that state if you have an agent, they must present any written offer to you, regardless of how ridiculous it is. Because you are For Sale By Owner, this is not the case. You are free to decide what you want to accept. There is no obligation.
All this said, I would recommend speaking with a real-estate attorney about the details, as they will know the specific laws of your state/region.
Source: I work in this industry.
1: Closing-costs are typically things like the appraisal, any "earnest money", etc. If the seller agrees to cover closing costs, then any money the buyer has to put into buying the home up to that value will be reimbursed to the buyer. This does not affect the loan term: it's still a $200,000 loan, the buyer just gets some of the expenses back. Thus, a $194,000 loan is not the same as a $200,000 loan with $6,000 returned for closing costs, these both result in the same seller-payout, but the buyer still has to finance the $200,000 in the latter case. It's complicated, but there are resources out there to explain it in more detail ("seller concessions" and "closing costs" are good terms to search for): https://www.mortgagecalculator.org/helpful-advice/seller-concessions.php
