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How Do Realtors® Get Paid?

Reblogger Pamela Stangler
Real Estate Agent with eXp Realty - The Stangler Group SL3253494

Until I got into Real Estate I totally misjudged how hard Realtors work and how little (sometimes none!) they get from each transaction.  If you want to understand how a Realtor gets paid, sometimes for more than 3-6 months of work, read this very eye-opening blog from my associate Chris Ann Cleland.

Original content by Chris Ann Cleland VA License # 0225089470

How do Realtors® get paid?  That's a question I get asked by just about every client I have.  I also get asked by friends who are thinking of getting into the business.  This post should make it pretty clear.

The vast majority of Realtors® are considered Independent Contractors for the Brokerages with which they work.  In my case, that's Long & Foster Realtors®.  As an Independent Contractor, you don't get health insurance or any paid benefits.  You don't get a regular salary.  And you don't get taxes withheld from your checks.  So where does a Realtor's® paycheck come from?

COMMISSION.  That's right.  Our pay comes only from commissions. 

So when your sitting at the settlement table and see that big commission figure on the HUD-1 going to your Realtor®, you think, "Man....this gal's got it good."  I wouldn't argue with that, because I love my job.  But if you think I'm taking home 100% of that figure you see in the box marked agent's commission, you are mistaken. 

The first person to get a hold of any of that money is the Brokerage.  They get a split of it right off the top.  They then cut the agent a check.  When that check comes, we have to pay state and federal taxes on what we just earned.  We also have to pay for our own health insurance (much more expensive than what is withheld by a company that offers health insurance plans to their employees.)  And since most of us in life want to retire one day, we need to withhold some money for our retirement. 

Only then do we get the commission we earned selling a house.   It's very similar to your own gross pay vs. net pay.

Now, you may think that because Realtors® are paid solely by commission, that we all run around town trying to shoe horn our Buyers into any old property as quickly as possible and that we will advise our Sellers to take any crappy offer to get the deal done.  That is also wrong. 

A Realtor® that looks out only for their own paydays is very short sighted, and also breaking the Realtor® Code of Ethics.  We are hired to put our clients interests above our own. Seems strange for a person paid only by commission, right?   It's not.  A wonderful thing happens when you look out for the best interests of your client.  They send you referrals.  Lots of referrals.  And when that happens, you are able to make a nice living selling real estate.  And the only way to get there is take care of the client first and foremost.

 

Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155.  To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com.  Or you can visit her website:  www.nvarealestate.net.

Header photo is the Bristow, VA community of Bramear, taken by Chris Ann Cleland during the blizzards of 2009-2010.

 

Posted by

Pamela Stangler Realtor with eXp Realty.  Yourkeysrealtor@gmail.com, 305-433-1036.

Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This is a great post to reblog and I think it sets forth the answer in a way that is easy to understand.

Jan 04, 2011 02:37 PM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Thanks for the reblog, Pam. 

Jan 05, 2011 06:03 AM
Pamela Stangler
eXp Realty - The Stangler Group - Cudjoe Key, FL
Florida Keys

Absolutely!  We need to educate the general public so they better understand our profession and maybe end some of the misconceptions. Plus, you have a gift with the words...

Jan 05, 2011 06:13 AM