How Does a Real Estate Agent Get Paid?
Don't be embarrassed if you don't know how real estate commissions work. Many people have misconceptions on how Realtors get paid and how much they actually make.
How and When Agents Gets Paid
Agents only get paid when there is a closing on the property they have helped sell. They do not get a salary, they are self employed. They are agents of the Brokerage, not employees. Agents have a lot of expenses and these are all paid out of pocket by the agent. If you see another property you are interested in, tell the agent you have been working with. Remember you save no money by dealing with a listing agent directly! You just cut out the agent that has been working hard to assist you. Your agent just does not get paid for their efforts.
Who Pays the Commission?
The seller pays the both listing and selling agent's commissions. This amount of commission to be paid by the seller was predetermined by the listing agreement that the seller signed when the property was placed on the market. The buyer pays no commission costs.
Can I get a better deal if I buy directly through the listing agent?
No, a better buy price cannot be achieved by buying directly through the listing agent. If the listing agent also sells the property, that agent gets all the commission instead of splitting with the selling agent. The selling price is not reduced, there is no savings to the buyer and in most cased no savings to the seller either. Any savings the seller receives is not shared with the buyer.
How Real Estate Commissions Work.
- All real estate agents must work for a licensed real estate broker.
- All real estate fees are paid to the brokerage - not the individual agent.
- Only a licensed real estate broker can pay a real estate commission.
- New agents can receive as little as 40% of the total commission received by the brokerage. Depending on the brokerage, fees may be deducted from that commission including advertising, office expenses, lock boxes, signs.
Listing Agents' Fees
A listing agreement, between a seller and the listing brokerage, gives an agent the right to exclusively market and sell the home through that brokerage. This agreement allows the brokerage to put the listing on the multi listing service (MLS) and in return to offer the cooperating broker a commission for bringing a buyer. The seller agrees to pay a commission to the listing broker who in turn will split this fee with the brokerage that brings a buyer. Generally this fee is a percentage of the sales price.
Cooperating Brokers
Just like life isn't fair, neither are commission splits. For example, a seller could sign a listing agreement for 7% that stipulates the listing broker will receive 4% and will co-broker 3% to the selling broker. It's not always a 50/50 split. Some brokerages will charge 7% and only offer the buyers agent 2%. In a buyer's market, sellers should insist on asking the broker to give a larger percentage to the buyer's broker.
ERA Emerald Coast Realty
Contact us for more information on selling homes in the Pensacola/Destin Areas.
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