Real estate is hot right now, home values are appreciating and many people are rushing to get their real estate license. But, sadly, many people do not ask this question, “How does an agent actually get paid”?
Listed below are some answers to common questions about real estate commissions:
How much does the regular agent make on a sale?
A typical commission for an agent can range from about 3% to 7% of the final purchase price of the home. Land and Commercial properties can command an even higher fee. That figure is usually split between the Buyer’s agent and the Sellers agent and any Referring agents involved, for example RELO Companies and out of state clients.
Who pays the agent’s commissions?
Typically, the Seller pays the commission to the Agents Broker through the Escrow Agent or Attorney. Once the transaction successfully closes, the money is sent to Brokers involved, then the Broker takes their portion and issues the rest to the Agents.
Can you negotiate the commission?
Of course. A seller can always negotiate the specific commission charged. With that said, keep in mind that you get what you pay for. Most Agents base the fees on the services and expense they expect to give.
Think it sounds like easy money?
If you want professional photo’s, need staging services, or would like ads placed in Luxury Magazines and a sign in the front yard, it’s going to cost you. On top of that, these items have to be paid whether the home sells or not.
Don’t forget the costs that both Buyers Agents and Sellers Agents put out for each transaction as well. Including but not limited to: Splits w/ broker, gas, advertising, websites, closing gifts, Continuing Ed classes, printers, computers, phone/data, ink, mailings, assistants and so much more.
That being said, it’s a great career. I am constantly learning, meeting new and wonderful people. I thrive on being super busy and I love where I live and showing it off. Life is good.
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