Buying or selling a home can be a complicated process. It’s important to have a knowledgeable real estate agent by your side to help guide you through the process. One question many people have is how do real estate agents get paid? The simplest answer is that they are paid a commission based on the final sales price of the property. However, the commission doesn’t just go directly to the agent, but it gets divided up between several different parties.

Typically, the seller pays 5-6% of the sales price of the property for real estate agent fees. The listing agent and buyer’s agent each receive half of the commission. The total commission is also typically split between the agent’s broker and the brokerage firm that employs the agent.

Many people are unsure of how these fees are determined, so they ask the agent’s broker or the agent themselves to break down their fee. For example, if the property sells for $200,000, the agent will receive a fee of $12,000. This amount is then split between the listing broker and the buyer’s broker. Must read

Once the brokers have their portion of the fee, they will then give it to the agents. The agent’s take-home pay is typically a lot less than this figure as their expenses and taxes must be deducted from the total.

Some real estate agents may also receive referral fees from companies or individuals who send them leads. These fees are typically taken out of the agent’s gross commission and can be as high as 25%. In addition, the large real estate franchises often have a fee that they charge their agents for being part of the franchise.

In addition to the standard 5-6% of the sales price, real estate agents also make money from additional services such as staging homes and preparing marketing materials for their clients. These can be an added expense that may not be a necessity but can help the client sell their home for a better price.

As for what happens if a home is not sold or if the transaction falls through? The seller usually still owes the agent their commission. However, the seller can recoup these costs by factoring them into the initial listing price of their property.

Generally, the amount of money that an agent makes depends on the type of work they are doing and how much effort is involved in getting the job done. Most of the time, agents are happy to work hard for a fair amount of compensation. It’s important to find an agent that you are comfortable with and who will not be reluctant to negotiate their fee. As a result, you can rest assured that the work that they will do on your behalf is worth their pay. After all, office furniture, copy machines and yard signs do not pay for themselves!