It is important to understand the structure of real estate commission, and when agents get paid since this is such an integral part of the home buying process.
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 significant expenses, and these are all paid out of pocket by the agent. If you see another property you are interested in, tell your real estate agent, and he can schedule a showing. 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 and your agent will simply not get paid for all of his previous efforts.
Who Pays the Commission?
The seller pays the both listing and selling agent's commissions. The seller determines the amount of commission paid in the listing agreement. The seller signs this agreement to list the property for sale. 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 purchasing directly through the listing agent. If the listing agent also sells the property the agent gets all the commission instead of splitting with the selling agent. The sale price does not change; there is no savings to the buyer and in most cased no savings to the seller either. Any possible savings the seller may realize, the homebuyer will not receive.
How Real Estate Commissions Work.
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 contractually allows the brokerage to put the listing on the Multiple Listing Service (MLS) and in return to provide 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. This fee is a percentage of the sales price.
Just like life is not fair, neither are commission splits. For example, a seller could sign a listing agreement for seven percent that stipulates the listing broker will receive four percent and will co-broker three percent to the selling broker. It is not always a 50/50 split. Some brokerages will charge seven percent and only offer the buyer's agent two percent. In a buyer's market, sellers should insist on asking the broker to give a larger percentage to the buyer's broker.