How does real estate commission work


Before selling and buying real estate, one of the most common question sellers and buyers have is about understanding how real estate commission fees work. Being informed about the real estate process is the best way to make sure you get the most from the transaction.

Feel satisfied knowing what you’re paying for and where your money is going. Most home shoppers, about 70 to 85 percent, use real estate agents to fulfill their home purchase. And comparatively most homeowners also use an agent to sell their home.

Real estate commissions:

Real estate commissions are the fees paid to a real estate agents upon the closing sale of a home. The total commission is shared between the sellers and buyers brokerages. Some of the agents are paid a flat-fee per each sale instead of a commission.

A real estate commission is usually 5-7% of the property’s selling amount, although it can be a flat fee also. To understand how real estate agents are paid, it helps to know about the connection between an agent and a broker.

Who are Brokers and Agents:

What’s the difference between agents and brokers? Brokers must pass a tougher exam than agents, and have more knowledge and experience. Agents work for brokers; they are certified to sell real estate but they can’t work without a broker. Some brokers work with home buyers and sellers, and some have a staff of agents working for them. Not all brokers work for themselves; many works for large real estate organizations.

Agents normally are paid a proportion of the commission received by the brokerage from the sale of listed property, depending on the agents experience their potion will be 30-70 percent. Each real estate agent is paid via a fixed amount from the agreement they’ve made with their broker. In most circumstances, the agent is given a percentage of the split, while the broker keeps the rest to cover office expenses.

In a real estate business, there are two kinds of agents: the seller’s agent and the buyer’s agent.

Seller’s Agent: A person who’s been hired by the seller to market the home and sell on their behalf.

Buyer’s Agent: The person who’s been by the buyer to help them find their new home and negotiate on their behalf.

Who pays real estate agent commissions:

Usually, the seller is responsible for giving the commission fees, along with any other final costs such as any title fees, which may be mandatory in order to transfer the deed on the property from one person to another. However, that’s not mean that the buyer gets these services completely for free. While the seller is typically able to pay the closing costs for the home — in which the real estate commission is involved. In more rare situations like short sales the closing costs may be the buyer’s duty.

The main thing that you need to do is read the listing agreement carefully before signing. That way, you’ll have a solid idea of your outlooks and responsibilities from the beginning. If you want a easy to understand listing agreement for selling real estate visit


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