The Eye Opening Truth About Real Estate Agent Commissions

It is a common misconception that agents are all rich and handsomely paid. Just put a for sale sign and wait for the commission check, right? Wrong. Here are some eye-opening truths about your average agent’s commission, negotiating a percentage, and the difference between buyers and sellers agents.

Real Estate Agent Commissions Vary – A Lot

Real estate agent commissions are always negotiable; there is no hard and fast rule on how much it has to be. Most transactions however will vary between 3 to 6 percent of the purchase price depending on the skill of the Realtor and what kind of split they are getting with their broker.

Let’s break down how this commission split works for agents.

All agents must work with a broker, someone licensed with the state to list and sell homes in a particular state. Brokers can be individuals, midsized companies like First Team Real Estate or national conglomerates like Re/Max or Century 21. That means all fees paid to an agent must pass through the broker who ultimately determines how its agents will be compensated or paid.

While some agents make bank on a home sale, that’s not the norm. Usually agents are paid on a commission split meaning that their percentage of the home sale is shared with the broker. New and inexperienced agents might only receive 30% to 40% of the total commission received whereas top producers can get as much as 100% and simply pay a desk fee for each transaction. Most agents fall somewhere in between these two extremes.

What An Agent Is Worth

On average homes sold with real estate agents sell for 11.3% more than homes sold without and 37% faster. Homes sold by real estate agents sell for more and quicker because agents know how to set and negotiate price, marketing strategies to find more buyers, and have tons of industry knowledge and connections.

So ask yourself, is a small cut of your home sale worth a bigger payout?

Listing Agent Commission

When an agent lists a home for sale it is up to the seller and the real estate agent to agree upon a commission price. The listing agent attracts a buyer and in return for this service, the seller agrees to pay a commission to the broker. Most commonly the fee is a percentage of the sales price and will be shared with the listing broker as well as the broker for the buyer. Because the commission can be negotiated with a listing agent it’s important to be smart about what to expect.

If an agent’s commission is low, there’s a reason. It might be because they plan on giving your home and sale less attention or because they know they are of a lower caliber than other real estate agents. Either way, be wary of sacrificing quality for a discounted rate because there’s a good chance that will greater your chances of finding a buyer willing to pay top dollar.

Buyers Agent Commission

In almost every home sale, the entire real estate commission is paid by the seller. That means the commission for both the buyer’s agent and the seller’s agent is paid out of the sale price of the home.

That’s right, buyers do not have to pay agent commission. The commission is written into the contract between the seller and their agent and is not your responsibility as the buyer. In some instances, buyers can pay the commission directly to the buyer’s agent. When this happens, the sales prices are often reduced to reflect the amount the buyer is paying out of pocket.

If you have more questions about how your real estate commission works or want to find an agent to help represent you in your home sale or purchase, search for a First Team Real Estate agent near you.

Share Post:

View More

Similar Posts