How Do Agents Get Paid?

The Jenn Opens Doors Real Estate Video Blog with Jennifer Welch

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Many people are unfamiliar with how real estate agents get paid and who pays them. Today, we want to demystify how the process works.

Real estate agents are paid a commission on the purchase or sale of a property. Generally speaking, the seller pays those commissions. While commissions can vary, they are typically around 6% of a home sale price. That 6% is usually shared between the seller's agent and the buyer's agent.

If you’re a first-time home buyer who is trying to understand what you need to pay for your Realtor services, know that most of the time your agent will be paid at closing as part of the seller’s fees. There are a few exceptions to this, but most of the time, the buyer doesn’t directly pay the commissions. Those that are selling their homes will have an opportunity to review costs with their Realtor and come to a final sale price that will allow for these commissions' costs and still makes sense for their budget.

The real question is, What are Realtors doing to earn all that money? Keep in mind that unlike lawyers, who are paid by the hour or doctors who are paid by the appointment, real estate agents don’t get paid unless the sale actually closes. For every hour that a real estate agent spends with their client, they typically spend nine or more hours working on that client's behalf. They are doing everything from networking and finding buyers, to previewing properties, filling out paperwork and negotiating on their clients behalf.

Agents have to spend their own money on marketing and are responsible for some steep licensing fees. Additionally, they have to split their income with their brokers, the percentage of which varies from agent to agent and broker to broker.

There’s clearly a lot to consider when thinking about how Realtors get paid, but what’s important is that you find your favorite Realtor and figure out those answers together. If you have any questions about how we can get the job done for you, or if you need real estate assistance of any kind, please don’t hesitate to reach out to us. We would love to hear from you soon!