If you’re getting into the lucrative real estate industry, you’re likely concerned about how you’ll earn a living while building a client base. This is a stressful thing to think about.
Realtors® don’t earn their income like most traditional salaried employees. This is due to the fluctuating value of the real estate market and the nature of the work.
However, if you establish yourself in your community and hone your skills, you can pull in some serious cash. Still, you’re probably asking yourself, “How do Realtors® get paid?” Let’s find out.
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How Do Realtors® Get Paid?
Real estate agents make the majority of their money through commission. This is a percentage of the selling price of the home. The commission may also be a flat fee.
This may seem simple enough, but there’s more to it. A real estate broker is also involved.
Agents must work for brokers, as there are rules against Realtors® receiving a commission directly from the public. However, brokers can work independently and hire agents to help bring in business.
When an agent closes a deal on a home, the commission gets paid to the broker. It’s then split between the broker and agent
Commission Through the Buyer
Because there are always two parties involved in the purchase of a property, it helps to understand who actually pays the commission.
For the most part, the home buyer doesn’t have to worry about paying Realtor® commissions. However, home sellers sometimes factor in the amount they’ll end up paying in commission when setting a price.
In some cases, when a seller lists their home, it comes with a condition regarding the buyer’s agent. It may state that the seller will only cover a certain percentage of the commission received by the buyer agent. Therefore, the buyer will then need to make up the difference.
This may put the buyer agent in a rough financial situation. That’s why resources such as mycommission.com work to help out with advances for Realtors®.
Commission Through the Seller
In most cases, the seller of a home will determine a commission rate before listing. This rate will get split down the middle between the seller and buyer agent.
An average commission is between 5 and 6 percent, depending on the location. However, some agents who have a long-standing reputation and go above and beyond for their clients can get more.
If an agent works for a large brokerage firm, the commission usually gets divided between more people. These include staff members who worked on the sale.
In addition, the amount of work an agent puts into the sale of the home can result in a higher rate. For example, some agents will stage showings, optimize listings, and generally take all work out of the seller’s hands.
Get Paid What You Deserve
As a real estate agent, it’s important you protect yourself from getting underpaid for hard work. Make sure the broker you work for is giving you a fair split.
If you’ve been wondering, “How do Realtors® get paid,” keep the details discussed above in mind. You’re on your way to a highly lucrative career.
Check out more articles related to the complex world of real estate.
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