Realtors typically get paid through commissions

Realtors typically get paid through commissions, which are a percentage of the property's sale price. Here’s a detailed overview of how the process works:

1. Commission Structure

• Percentage-Based: Most real estate agents earn a commission that’s a percentage of the final sale price of the property, commonly around ?%. This can vary based on the market, location, and agreement with the seller.
• Split with Brokerage: Realtors usually work under a brokerage, and the commission is split between the brokerage and the agent. This split could be anywhere from 50/50 to 96/4 (agent’s favor), depending on the agent’s experience and the brokerage’s policy.

2. How the Commission is Divided

• Seller's Agent & Buyer's Agent: In a typical sale, the commission is divided between the listing agent (representing the seller) and the buyer's agent (representing the buyer). For example, if a commission is ?%, it may be split 50/50, giving each agent ?%.
• Referral Fees: Sometimes agents pay referral fees to other agents who bring them clients. This can further reduce the agent's take-home pay.

3. Payment Timeline

• At Closing: Realtors only get paid when the sale closes. If a deal falls through before closing, the agent doesn’t receive a commission.
• No Salary: Most agents work entirely on commission, meaning they don’t earn a salary and only get paid if they successfully close deals.

4. Negotiating Commission

• Flexibility: Commissions are negotiable. Some sellers may negotiate a lower rate with the listing agent, especially in highly competitive markets.
• Discount Brokers: There are also discount brokerages that charge lower commissions or flat fees, but they might provide fewer services than traditional agents.

5. Special Circumstances

• Dual Agency: In some cases, an agent may represent both the buyer and the seller in a transaction (dual agency). In these instances, the agent may keep the full commission.
• Commission Rebates: Some agents offer commission rebates to buyers as an incentive, especially in competitive markets.

6. Market Impact

• Changes in the Market: As the real estate market fluctuates, so can commission rates. In a seller's market, commissions may be more negotiable, while in a buyer’s market, agents might need to offer competitive rates to attract clients.

Understanding how commissions work and how they are divided is crucial for agents to manage expectations and plan financially.