How Does My Agent Get Paid When Selling a House?
This is a common question that my team and I try to explain at our first meeting so there is no confusion for anyone. Let me break it down for you.
In most markets around the country, the standard real estate commission is 6% of the total price. (Any time I talk percentages it’s a percentage of the total sales price of the home.) That 6% is paid by the seller at the time of closing on the home to their agent who represented them on the sale and if there is another agent involved in the transaction who represented the buyer then that fee is typically split - 3% to the listing agent, 3% to the buyer agent. If no buyer agent is involved then the listing agent is allowed to keep the entire 6%. Technically, the seller is agreeing to pay the listing agent a total commission (again 6% is common) and then the listing agent makes an agreement to pay the buyer agent should that be needed.
Listen along!
The Maroon Group Podcast
I know when we talk percentages it can become confusing so here are the most important points to remember:
1. If you’re a buyer – hire a real estate agent because there is no cost to you to be represented. Your agent will be paid by the seller. It only makes sense to have real representation when the cost to you is effectively zero dollars.
2. If you’re a seller – understand that the cost of the agent fees who are involved in the transaction will come from you upon consummation of the sale. It will be deducted from your proceeds on the sale of your home.
Now you may think that’s a lot of money for the agents but keep in mind, they have lots of fees to continue to be in business – they pay their broker a split, they pay their own marketing, their real estate dues, higher self-employment taxes, etc.. The average real estate agent is only making around $30,000 a year.
Ultimately, if you have a truly talented real estate professional on your
side, every single penny to hire your agent will be money well spent. They will protect your largest asset and make sure you receive the best possible profit for your home.