Who Pays the Broker or Agent?

Who Pays the Broker or Agent?

One of the most common questions in any real estate transaction is: "Who pays the broker?" Is it the buyer or the seller? The landlord or the tenant?<br />It’s a fair question—and one that can cause unnecessary confusion especially if you as the broker are also not sure of the answer so lets discus the best practices and different scenarios that may come into play so we can help you navigate this tricky question.

1. Seller or Landlord’s Responsibility

In most real estate transactions, it’s the seller (in sales) or the landlord (in rentals) who pays the broker’s fee.

• In Direct Sales:<br />The seller typically pays a commission based on a percentage of the final sale price—anywhere between 2% to 6%, depending on the country, type of property and agreement with the broker or listing agent.
• In Real Estate lease transactions:<br />The rates and structures may vary, but landlords usually pay a percentage of the gross lease value or offer a flat fee based on negotiation.

An example to illustrate this: A seller agrees to pay a 5% commission on a property sold for UGX 300M. The broker in this case receives UGX 15M at closing.

2. Buyer or Tenant’s Responsibility

While less common, there are situations where buyers or tenants pay the broker directly and these include the following:

• When they engage an exclusive buyer’s agent to represent their interests.
• In competitive rental markets (e.g. Kampala or Nairobi), some brokers charge the tenant a percentage or a flat service fee to find them a property

Example: A tenant finds an apartment through an agent who charges UGX 300,000 as a finder’s fee—often equal to one month’s rent.

This structure varies widely depending on:

• The type of real estate (residential vs. commercial)
• Market demand
• Pre-agreed service arrangements

3. Broker Agreements and Legalities

Brokers often sign service contracts or listing agreements with their clients—whether that’s the seller, buyer, landlord, or tenant. These documents define:

• Who pays the commission
• How much the commission is
• When payment is due

And this is an important document to have going into a transaction so that’s its clear from the get go who will be paying, how or when and so on

In Uganda, there's growing professionalism in real estate, but many deals still happen informally, so it's critical to put everything in writing—especially fee arrangements.

In regulated markets like the U.S. or UK, disclosure of commissions is a legal requirement. In Uganda, it's still largely relationship- and trust-based, which puts more pressure on clear communication.

Pro Tip: Always Know the Terms Before You Commit to a Transaction.

In short:

• Sellers and landlords typically cover broker fees.
• Buyers and tenants might pay in some situations—especially in rentals.
• The details should be clearly stated in a signed agreement before any work begins.

Whether you're a landlord, investor, or first-time homebuyer—ask these questions early. Know who’s paying whom, for what, and when. It’ll save you a lot of awkward conversations later.

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Suggested Titles:

1. “Who Really Pays the Broker? What Every Buyer, Seller, and Landlord Needs to Know”
2. “Broker Fees Explained: Don’t Sign Until You Know This”
3. “Buyer or Seller? Tenant or Landlord? Who Covers the Agent’s Fees?”
4. “Who Pays the Broker? Understanding Real Estate Commissions”
5. “Real Estate Brokers: Who Covers the Fees in Your Deal?”
6. “Broker Fees Explained: What Every Landlord and Buyer Needs to Know”