Saturday, May 25, 2024

How to Pay the Real Estate Agent

Many home buyers and sellers do not think about how real estate agents make their
money or from where their fees come. This might be surprising, considering that
real estate agents must pay for things like office furniture, office supplies and yard
signs. But it is important to know how agents are paid before hiring one to help you
with your home sale or purchase.

Most real estate agents work on commission only. Usually, the total commission is 5-
6% of the home’s selling price. This amount is then split between the agent
representing the buyer and the seller’s agent.

It is important to note that while a home seller may negotiate the listing fee with a
particular agent, they must also contract with a broker who will actually hold the
listing. This is because legally only brokers can list homes. It is common for a listing
agent to receive a referral fee from another agent, in addition to the commission
they earn on the home sale. Also read

While this information might sound confusing and difficult to understand, it is vital
that buyers and sellers understand how real estate agents are paid. It is the only
way for both parties to know that they are receiving fair representation.
Real estate agents do not get paid weekly or biweekly like typical employees.
Instead, they work without pay in anticipation of earning their commission payments
at the end of a sale. This is why it is important for real estate agents to have reliable
income streams, such as rental properties and passive investments.

Normally, a listing agent will agree to a specific commission split with the person
they are working with, typically on a written agreement. The exact percentage is not
necessarily important, but it should be clear to the homeowner and the buyer. A
typical commission split is 3%, meaning the listing agent and the buyer’s agent will
each get 3% of the final sales price.

The buyer’s agent commission is usually negotiated with the seller in the same
manner. However, in some cases the buyer’s agent will offer a rebate to the buyer,
where they will give back part of their commission to the buyer. This is an excellent
strategy used to attract more buyers and can be very beneficial for home buyers on
a budget.

A buyer’s agent rebate can save you thousands of dollars!
Typically, closing costs are an assortment of fees (like taxes, title insurance, lender
charges, etc.) that must be paid at the time of closing, in addition to the selling price
of the home. It is important to keep in mind that a real estate agent’s commission is
not included in these closing costs.
Although refusing to pay a realtor commission can be considered a violation of real
estate law, it is not an option for homeowners who have already signed a purchase
agreement. Additionally, home owners may owe a payment to the real estate agent
for marketing expenses even if they do not sell their property. This is because the
real estate agent has spent time and resources advertising the property and seeking
potential buyers, regardless of whether they ultimately close on a deal.

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