How a Real Estate Agent gets Paid

(No Ratings Yet)

Total Views: 77

<< Communicating with your Real Estate Agent

Discount and Flat Fee Brokers >>

If agents were free, everyone would use one, right? But not everyone knows exactly how a real estate agent gets paid, or what they get paid for.

Agents are mostly paid on commission, which they only get if the home actually sells. That is, an agent works for free until the very last moment, when the deal closes. Many agents spend weeks or months working on a listing, only to have it end up not selling, often times through no fault of their own. That’s tough, but that’s the system.

When the home fails to sell, it works out better for the seller than the agent – after all, the seller didn’t have to spend thousands of dollars for all the time that the agent put in on trying to get the home sold. It’s strictly a pay-for-performance deal. If the agent doesn’t perform, for whatever reason, the agent gets nothing.

When an agent does actually do the job they get hired to do, they do often get paid a handsome commission, it’s true. When the home sells in a week, it can seem like the agent is really getting a lot of money for very little work. On the flip side, an agent can do a tremendous amount of work, and then get paid nothing. It’s a winner-take-all, loser-gets-nothing system.

When an agent takes on a listing, they’re also assuming a significant amount of risk that they’ll not get paid a dime – and higher risk means higher reward. And that begs the question – in a hot market, when you’ve got a well-priced and desirable property, there’s a lower risk that it won’t end up selling, right? Then shouldn’t the commission be negotiable?

In fact, commissions – like everything else in real estate – are negotiable. If you are thinking your home is going to be an easy sale (or even if you don’t think so) – go right ahead and try to negotiate the commission. Don’t take it as a bad sign if the agent isn’t flexible on their commission. Many agents are worth every penny they charge. If they won’t budge on the commission and they really seem like they are going to do a first-rate job getting you top-dollar for the home, keep them in the running.

Realize, too, that the commission is typically split 50/50 between buyer’s agent and seller’s agent. That’s not always the case, but it’s typical. Ask your agent how much of the commission he will be giving to the buyer’s agent. It’s not a bad idea to give the buyer’s agent a higher split, or offer the buyer’s agent a flat cash bonus on top of the split. Incentivizing the buyer’s agent to show your property is not a bad idea.

It’s important to understand that the listing agent will have to share his portion of the commission with his brokerage – he might only walk away with 70-80% of the commission earned. Out of that will come taxes and expenses for marketing the property, his staff costs, etc. At the end of the day, the commission that a listing agent receives is much smaller than it may at first appear.

Thinking of selling your home, but not sure where to begin? Want to know how you can be sure you'll get the most money for it, as quickly as possible, with the least amount of worry? Sign up for the SellForSure System today!

Please read our privacy policy.

Already registered? Please Log in.

Comments

Trackbacks

Real Estate Tax Information for Home Sellers says:

September 28, 2014 at 10:08 pm

[…] to the purchase price. Next, add together all the expenses you’ve incurred to sell your home (commissions, staging, cleaning, etc) and subtract this figure from the sale price. If you’ve made less […]
Free Home Inspection and Termite Inspection says:

October 4, 2014 at 2:37 am

[…] such big believers in this that we will agree to credit the seller, from the listing agent’s commission at close of sale, the costs paid by the seller for the home and termite inspections obtained at […]
Dual Agency says:

October 6, 2014 at 12:53 pm

[…] course, when an agent represents both parties in the transaction, he typically is paid the full commission. In a case like this, some agents may agree to accept a lower commission, to entice the buyer […]
How to Interview a Real Estate Agent says:

October 21, 2014 at 8:06 am

[…] You really need to know if this is someone you can trust. Is this someone who you feel will do their best to get you the very best price for your home – or is this someone who is mostly concerned with getting your home sold quickly and getting a fat commission check? […]
Private Sale vs. Public Sale on the MLS says:

November 26, 2014 at 3:04 pm

[…] is when it comes to netting the most money for the sale. Often times in a private sale, there is no commission, or a much lower commission, and you may not need to lay out cash preparing the home for sale on […]
Communicating with your Real Estate Agent says:

February 9, 2015 at 5:28 pm

[…] agent is in the service business. They’re going to be well paid for that service. You deserve to get the kind of service you expect for the money they’re […]
How much it Costs to Sell a Home says:

February 9, 2015 at 7:23 pm

[…] proceeds of the sale. They include paying off your loan for any existing mortgage(s) or liens, and your real estate agent’s commission. Additional costs include the seller’s share of title and escrow fees, and, in some cases, […]

Comments

Related

Reader Interactions

Trackbacks