The Truth About Realtor's Commissions and Pay Plan

The Truth About Realtors® Commissions and Pay Plan   

Have you ever wondered how Realtors are paid? If you are to use a Realtor's service, whether buying or selling; it is important to know this. People are always motivated in different ways depending upon the manner in which they are compensated.

Realtors work on an arrangement known as straight commission. It mean they don't make any money unless they make a sale and it is successfully closed, with the buyer taking ownership of the property and the seller receiving whatever payment is due to them.

NO SALARY

Realtors are not paid a salary or hourly wage. If a Realtor is helping you find a property, all the time spent driving you around is not compensated unless you actually buy a property through that agent. Realtors invest their time and effort into their clients and appreciate their loyalty. Realtors have no guarantee of when or how much their next pay check will be. They are not paid for efforts, only results!

NO EXPENSE ACCOUNT

All expenses such as automobile, gas, multiple listing fees, advertising and promotions are all the obligations of the individual agents. For example if a Realtor buys you lunch while you are out viewing properties, that expense is not reimbursed. It is an out of pocket investment that the Realtor is making in you in the hope that you will be successful finding the right property.

NO DRAW
Realtors are not paid until the sale has been closed and funded! Some other professions may pay draws to salespeople on pending sales. Because there is absolutely no guarantee in real estate that closing will occur, no draw is paid.

IT'S STILL A LOT OF COMMISSION

Realtors have many expenses. Including the office they pay to work for monthly, insurance, association fees, membership fees, and advertising fees. These fees are paid regardless if they have a transaction or not. The Realtors paid commissions are then split with their company and possibly other associates involved in the transaction.

ADVICE: ALWAYS USE A REALTOR. THEY ONLY GET PAID FOR RESULTS.

Respect their time and efforts that they invest into finding you the perfect property by working with them exclusively with a Buyers Representation Agreement so they can represent your best interests.