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How Do Agents Get Paid

One of the most common misunderstandings in the real estate business is how we, as real estate professionals, get paid. I hear different versions of this all the time, but let’s just go ahead and clear it up.

First of all, we don’t make NEAR as much money as you probably think. When you watch shows on Bravo or E! or HGTV, it would appear that each of us is a millionaire driving Jags and wearing $2000 shoes. That is SO NOT THE CASE. You wouldn’t believe how much it costs to practice real estate. Many people can’t do it without the help of a spouse’s second income or even a second job. Out of each commission check we receive, we must pay taxes, MLS dues, advertising costs, broker fees, desk fees, and the list goes on. That being said, if you are working with a full-time real estate agent, you are working with someone who LOVES what s/he does. If we didn’t love it, we wouldn’t do it. It’s that simple.

Now that we have that out of the way… my commission is paid almost 100% of the time by the seller/seller’s agent. That’s right! If you are using me to help you find a home, you are receiving a FREE service. This is great news for a buyer. With all the costs you are about to incur, between closing costs, a down payment, a home inspection, an appraisal, and more, the last thing you should have to worry about is paying for someone to help you find a home.

When a seller lists their home with a real estate agent, s/he agrees to pay a percentage of the sale to the broker that lists their home. In turn, the broker agrees to pay what is known as “co-operating compensation” to the broker that actually brings the buyer.

When I list your home, you can rest assured that a big portion of the percentage you are paying me will be going straight to the sale of your home in the way of advertising and marketing costs. I will be paying for a number of professional services (such as photography), a For Sale sign for your yard, MLS fees to list your home, and more. I would love to discuss with you further my complete list of marketing tactics. I am also providing a portion of this percentage to the agent working with a buyer.

So, as you can see, when you list your home with a broker, that commission isn’t going straight into the broker’s pocket. It will be split between all the service providers and a buyer’s agent that will bring the buyer to see your home. If you are a buyer, you will not be responsible for commissions. Long story short, in either case, it pays to use an agent!