There’s a lot of talk today about what a buyer’s agent is worth — and more importantly, who actually pays them. The purchase of a new home is perhaps the clearest example to frame those questions. But too often, they hide behind myths. To get clear on the truth, we need to dismantle those myths one by one.
Myth #1: The Seller Pays the Commission
Traditionally, most people believe the seller pays all of the real estate commission. That’s a long-held story — but it doesn’t hold up under scrutiny.
Back in the days when only seller representation existed, listing brokers would negotiate a commission with the seller. If the listing broker found a buyer on their own, they'd keep the entire commission. If not, they’d engage a “sub-agent” to bring a buyer, paying that sub-agent out of their commission. In that arrangement, the seller never directly paid the sub-agent — the broker did. Those sub-agents did not represent the buyer; they worked for the listing broker (the seller’s side). That system is outdated and it fostered confusion because buyers often mistakenly believed those sub-agents were working for them.
Myth #2: Buyer Representation Costs You Nothing
When buyer agency emerged in the late 1970s, the industry needed a narrative: that buyer representation “costs nothing” to the buyer, and that the seller was paying for it. That idea stuck — but it’s more fiction than fact.
In truth, the buyer’s funds are what go into escrow. From there, escrow pays all transaction costs, including inspections, repairs, closing fees, and yes — both brokers (seller’s and buyer’s). In effect, the buyer is the true source of commission funds, just as with any other cost of the transaction.
Think of it like this: when someone sells a taco for $3, can they claim the full $3 as their “income”? Of course not — they deduct the costs (food, labor, rent). The net is what truly belongs to them. In real estate, escrow acts as the accounting intermediary, and the buyer’s money (even implicitly) pays everything including agent commissions.
In new construction, the arrangement is even more transparent. Builder contracts require progress payments (draws) from the buyer that explicitly cover labor, materials — and representation (for both builder and buyer, where applicable). If the deal doesn’t close, no commission is paid — there is no “buyer’s money” to pay anyone. So the notion that commissions are “free” to buyers is a myth.
Myth #3: The Builder’s Site Agent Represents the Buyer
Many buyers assume the onsite agent at a builder’s model home is there to help them. That’s one of the most damaging misconceptions — in new-home sales, site agents represent the builder (seller) only.
Some builders allow this misunderstanding to persist, even though their contracts and disclosures (sometimes more than a dozen) clearly state that the site agent is exclusively the builder’s representative. In some cases, those site agents may be from separate brokerages but still act as sub-agents of the builder. This is one place where a variant of subagency still exists.
A savvy buyer will read the contract and understand that the site agent is not their advocate. Unfortunately, many buyers don’t read carefully (or at all), and they end up in a relationship that is inherently imbalanced.
Myth #4: Agency Exists Only If Your Agent “Registers” You
Another common myth: that agency exists only if the buyer’s agent signs in at the site or “registers” the buyer with the builder. That’s false. Real agency is a matter of duty and representation, not just paperwork.
For new-home builds, a true buyer’s agent must actively represent the buyer’s interests — through contract review, negotiation, inspections, communication with the builder, and protecting their client at every stage. It’s not enough to drop off a buyer at the site and expect payment at closing. The agent earns their commission through ongoing advocacy, not passive presence.
What a Good Buyer’s Agent Should Do
- Review and explain contracts — urging clients to read and red-line terms before signing. (Beware using resale-oriented contracts for new construction; altering them may exceed an agent’s purview.)
- Act as liaison between buyer and builder to eliminate miscommunication.
- Recommend inspections and ensure defects are caught before the final walkthrough and punch list.
- Manage punch lists and hold the builder accountable for promised finishes.
- Educate and advocate — bust myths and protect the client’s interests end-to-end.
Contact John • Join 1912 Realty