Who pays for the realtors commission when you buy an "REO" property on the open market that is bank owned?

Answer 1

The bank does. Generally, they're limited to 5%, not 6-7% like a private seller would pay.

Answer 2

The Realtor is always paid by the seller. (Unless you have a buyer's agent and purchase a home where the agent is not protected.) In the case of an REO, the seller is the bank. So the bank pays for the Realtor.