The fact is most people don’t have any idea how real estate agents get paid, so we put this post together to break it down….
How Real Estate Agents Get Paid
When a homeowner puts their home up for sale they hire a real estate agent, commonly referred to as a Realtor®.
The agent who “lists” the home for sale is called the “Listing Agent”.
The seller and the listing agent decide on the commission to be paid when the home is put up for.
Traditionally between 6-8% of the sales price.
Real estate commissions are paid by the seller out of the proceeds from the sale to the Brokerage/Realtor they hired at the close of the transaction.
If there are two agents involved in the transaction (one representing the buyer, and one representing the seller), the commission will be split between their respective brokerage companies. So in a scenario where the seller pays 6%, 3% get’s paid to the buy side agent and 3% gets paid to the listing agent.
Every real estate agent must work for a real estate broker (for example Big Block Realty).
Agents cannot act independently and they are not paid directly.
When a transaction closes, escrow will cut a check to each broker and then the agents are paid by the broker for whom they work.
The brokers and their agents have a set compensation agreement.
Simply stated, the commissions for both the listing agent and the buyer’s agent are built into the sales price of the home by the seller, and thus paid by the seller.
So if you are a Seller you can expect to pay 6-8% commission
If you a the buyer, you don’t have to pay any commissions.
For more info take a look at this other post we did on: “The Common Closing Costs In California”
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Sam, Oliver, and Sandro
“The Home Team”
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