Let’s imagine that two identical homes are for sale, and it’s a buyer’s market. The owner of home A has contracted with a real estate agent to pay a 1% commissi

Let’s imagine that two identical homes are for sale, and it’s a buyer’s market. The owner of home A has contracted with a real estate agent to pay a 1% commission if there’s a sale, and the owner of home B has contracted to pay 2% to a different agent. Both homes have a market value of $1 million. The buyer will pay $1 million for either home, and won’t be willing to pay more for home B just because the seller has agreed to pay their agent more. We can see that the incidence of the agent’s fee is on the seller in this case. Put differently, increasing the agent fee decreased the net worth of the seller after the transaction, not the buyer. Given different facts, the incidence could be on the buyer. The fact that the buyer is supplying the cash doesn’t tell us who the cost falls on. The buyer could pay by adding more cash or the seller could pay by gaining less cash. I’m cribbing from the concept of tax incidence here: https://en.m.wikipedia.org/wiki/Tax_incidence https://en.m.wikipedia.org/wiki/Tax_incidence