Whether you are buying or selling a home, chances are you will work with a realtor to get the job done. But since you aren’t paying them directly, it may not be clear how they make their money.
Realtors make money through commissions based on a percentage of the price at which a house is sold.
How much of a percentage they get depends on a couple of factors.
How does real estate commission work?
Most of the time, a realtor’s commission is a percentage tied to the selling price of a home. However, you may occasionally find one who has a flat fee. There is also a newer model in which agents are paid a salary and simply make bonuses based on customer satisfaction.
However, commissions are still the most common way in which realtors make money.
Real estate agents are licensed salespeople who work under a designated broker. Agents are not allowed to be paid a commission directly by consumers.
All commissions in a sale involving a real estate agent must be paid directly to a broker, then the broker splits the commission with all agents and brokers involved in the sale.
How much money goes to the broker is specified in the listing agreement, the contract between the home owner and the listing broker. You can negotiate the amount of the broker’s commission.
The commissions are taken out of the sale. In most cases, the seller pays the commission unless the seller negotiates a split with the buyer for whatever reason.
How real estate commissions are split
All commissions in a real estate sale are shared among all agents and brokers involved. In most cases (unless a realtor is his own broker), the commission is split four ways. The realtor representing the seller and their broker as well as the buyer’s agent and that agent’s broker get a piece of the total commission.
The percentage each agent and brokerage get depend on how much the agent and their broker have agreed upon.
Of course, if a listing agent also finds a buyer, the listing agent and their broker would keep all commissions.
Partin Real Estate commissions
At Partin Real Estate, we are upfront and honest about our commissions when you sell your home with us. We are always fair with our negotiations and will work hard to get your house sold.
*The information in this article reflects Partin Real Estate’s office only*