How to Pay the Real Estate Agent

People who are interested in buying a home often wonder how real estate agents

are paid. Unlike some other industries, most real estate agents do not get paid on a

regular basis and instead work for commission. Normally, this commission is a

percentage of the property’s sale price and is split between the agent who

represents the buyer and the seller’s agent. Some brokerages offer a standard

commission rate, but others may charge less. In addition, it is common for agents to

negotiate their fees. If they know that you are looking for a home and that you plan

to purchase one soon, they might be more willing to lower their fee. If you have

worked with a particular agent before, they might be more inclined to offer you

repeat business and reduce their fee.

Most people who are not real estate agents don’t give much thought to how or why

real estate agents are paid what they are. They just assume that when they sell a

home the agent’s broker will send them a check for some amount of money, usually

in the range of 6% of the sales price. While this may be true in some cases, the real

estate industry is more complex than that and it is important to understand how real

The fact is that the vast majority of agents’ income comes from commissions.

Whenever someone buys or sells a home, the agent who is working with that person

will receive a commission payment from the broker they are employed with. This is

typically a percentage of the sales price and is split between the selling agent and

the buying agent.

For example, if you are selling your house for $200,000, the listing broker would

receive a commission of $12,000 and then share that with the selling and buyer’s

agents. In this case, both the selling and buying agents would each earn $6,000.

In some cases, buyers can ask their agents for a rebate on their commission.

However, in most cases, these requests are not granted. In fact, some states even

have laws against home buyer rebates.

It is worth noting that some brokerages, such as national discount brokerage Redfin,

pay their agents a salary rather than a commission. While this is not common in the

industry, it is becoming more and more popular. For many, this is a more

transparent way to approach the business and it also allows consumers to know

upfront exactly what they will be paying for their services. However, the majority of

real estate agents still operate under traditional models. Ultimately, it is up to the

individual agents to decide how to structure their own businesses and what kind of

commission model they want to use. In the end, most choose to structure their

commissions based on what they feel will be best for their clients. They will often

take into account factors such as the time and effort it takes to close a deal and the

market conditions at the time they are negotiating their fees with the seller or the

buyer.

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