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Whether you’re a home-buyer or seller, you have to deal with a real estate agent for a safe and hassle-free transaction.
Only a few sellers prefer to purchase or sell a home without help of a real estate broker. But most of those for-sale-by-owner transactions are done between buyers and seller who are already related to or know each other. On the other hand, most home-buyers work with a real estate agent while buying a property.
Here’s how your realtor gets paid…
How They Get Paid – In a Nutshell
Unlike other professionals who get paid on hourly basis or send an invoice after finishing a project, real estate agents get paid only at the end of the sales transactions. If an agent works with a home-buyer or seller for even a couple of months sans a successful transaction, he or she won’t get paid for his or her time. They earn commission on the basis of the sales price of the property and only if the transaction goes into an agreement.
Amount of commission is also negotiable between the listing agents and the clients. Though some brokers provide a discount to the sellers, typical commission is 6% (total) of the sales price.
In some cases, commission is uniformly divided between the buyer’s agent and the listing agent, while in other cases, the division is done unevenly.
The Broker and the Real Estate Agent
While some realtors are brokers – commission payment goes to the brokers who handle the brokerage where realtors work.
The commission is then divided between the broker and the real estate agent as per the agreement done between them. This split of commission differs from agent to agent with new real estate agents usually getting a smaller percentage of commission than the experienced ones who sell more properties or rather pricier properties.
Officially, the commission is paid by the seller at settlement table where the fees are deducted from the proceeds of the sale. But, in a sense, the buyer pays commission as they pay to buy the property and the seller has taken the realtor commission into account while fixing the listing price. The commission usually (though not always) gets divided at the settlement table between buyer’s agent brokerage and listing agent’s brokerage. After that, both the agents get paid by their respective brokers as reported by top real estate agents Noe Valley, California.
Commissions and Contracts
The precise percentage of realtor commission must be spelled out in the listing agent’s contract with the respective seller so that the former gets paid if the home sells, irrespective of who purchases it.
Listing agents along with the brokers spend both money and time for the marketing of a property, advertising and making the home ready for sale and they get paid for these services. The buyer’s agent typically has a contract with his client so that he gets paid when the buyer completes the purchase even if he has found that specific home on his own.
About the Author:
Angelina Brown is a professional financial adviser. She loves to share her thoughts with others. Angelina has expertise in California real estate market and has been associated with Agentace since a long time back. She likes to explore all the possibilities in real estate which can help people to make successful deals in real estate market.