How Does Your Real Estate Agent Get Paid?
Posted on: 24 August 2020
Are you currently in the process of buying a home but are a bit shocked that you don't have to pay your real estate agent anything for their services? If so, it will be a good idea to know how your real estate agent gets paid for helping you buy a home.
The Seller Sets The Commission Rate
When a real estate agent agrees to sell a home, they are entering a contract with the seller on what the commission rate on the home will be. This is typically a percentage of the sale price of the home, with a home that sells for a higher value being worth a higher commission. However, an agreement may also be to give the agent a flat fee for the sale of the home. It really depends on what is negotiated with the seller and their agent.
Many people wrongfully assume that the commission is based on the list price of the home, but it is actually based on whatever the final sale price ends up being.
The Buyer's Agent Gets A Percentage Of The Commission
The seller's real estate agent is the one that negotiates the commission, and then that commission is split with the buyer's real estate agent. It is very common for the commission to be split down the middle 50/50, but it may also be a flat fee depending on the situation. In general, the commission is negotiated between both agents once an offer has been accepted on a home.
The Agents Don't Get Paid Until The End
Once the selling agent has agreed to a commission on the home, they do not get paid unless the home has been sold. This means that the final paperwork has been signed and the transaction is complete. If for any reason the sale of the home falls through, the buying and selling agents should not expect to receive any money from the process up until that point.
The Buyer Does Not Receive Money If They Do Not Use An Agent
Don't assume that you can save money on the purchase of your home by not using a real estate agent. You will not be entitled to the commission that the buying agent normally receives as part of the final transaction. However, you are always free to negotiate the price of the home so that it is lower, which could save just as much as receiving a commission.
Contact a real estate agent to learn more.
Share