Everything You Need to Know About Real Estate Agent Commission

Tuesday Mar 09th, 2021


Chances are, if you're selling your home, you're working with a real estate agent. This person works with you closely to ensure you find the right buyer for your home. They work on the listing, the open house and marketing. As such, they get a piece of the final sale price pie. But how much real estate agent commission do they get? When do they get it? How does it work?


4 Facts About the Real Estate Agent Commission

If you're in the process of selling your home, you may be wondering how your real estate agent gets paid. Here are the answers. 


1. The Real Estate Commission is Based on the Final Sale Price - But Not Always

Most real estate agents get a percentage of the home's final sale price. Whatever price you and the buyer agree on, the agent will get about 4-5%. This is because the commission is split between your agent (the selling agent) and the buyer's agent.


However, sometimes the agent asks for a flat fee, not a percentage. In this case, they get paid a certain amount no matter what the home ends up selling for on the market. 


2. The Commission is Split Between Agents and Brokers

Contrary to what you may know, your agent and the buyer's agent won't get the full commission from your sale. Instead, their respective brokers, or the parent/umbrella companies they work for, will get a piece of it too.


3. In Some Circumstances, You Can Still be Liable for the Agent's COmmission if Your Home Doesn't Sell

Most cases require the transaction of a home sale to be "settled" before the agent(s) will receive their commission. Otherwise, they don't get a cent. 


But there are some circumstances where you may still have to pay up, even if your house doesn't sell. For instance, you may still need to pay if:

  • You insist on terms not present in the original listing agreement.
  • You and the buyer agree to mutually release the sale.
  • You commit fraud related to the sale.
  • You have a defective title.
  • You want to cancel the listing agreement, but the agent has already spent the money to advertise your property.


4. You Never Pay the Agent Directly

As already stated, your real estate agent will never receive a direct payment from you. When you pay the real estate commission, that check goes to the broker's office, who then splits it up and pays the agent. Technically, agents are considered self-employed, but they work as salespeople for their real estate company.


Real Estate Agent Commission is a Bit Complicated

In general, as a seller working with a broker and a real estate agent, you don't need to worry too much about commission (other than paying it of course). But it's nice to know exactly where your money is going and how it's distributed after the home sale. 

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