How Real Estate Agents Get Paid
Most home buyers enlist the services of a real estate professional when buying a house. It only makes sense - agents have experience in dealing with the myriad issues surrounding the process, and they usually have the homes listed for sale. But the question often comes up: "How do agents get paid and who is responsible for that payment?"
First, we need to state that every agent must work for a broker. Usually the name of the broker can be found on the agent's business card or "for sale" sign. That broker is the one licensed with the state to do business and can list and sell homes in that particular state.
The broker determines how its own agents will be compensated. Agents are usually compensated on what is called a "commission split," meaning that a broker will get a percentage of the commissions that an agent brings in the door.
In addition, brokers set the commissions they will accept on homes listed for sale with their firm. In many markets across the nation, brokers charge a percent of the eventual selling price if the property sells during the listing period. Agents then receive a portion of the percent charged, essentially a sales commission paid by the broker.
Most often, brokers require that sellers sign an "exclusive right to sell" listing agreement. That means that the seller will pay a full commission to the broker if the home goes under contract during the listing period, usually 90-180 days. Regardless of who or what caused the house to sell, the broker earns full commission.
In a further effort to make the property sell quickly, most brokers agree to cooperate with other brokers in the sale of their listed property. That means that if the buyer is working with one company and the property is listed with another, the listing broker will share half the commission with the other broker making the sale. That broker is called the selling broker, and the agent who actually works with the buyer is called the "selling agent." As we said earlier, the selling agent is probably on a commission split with his or her own broker as well.
Here is the important thing to remember:
In almost every case, the entire
real estate commission is being paid by the seller. That is true even if the
agent you are working with has signed a buyer brokerage agreement with you.
However, a real estate transaction can be negotiated any number of ways, and
that includes the possibility that the buyer could end up paying some or all of
the sales commission.
So, to give an example:
You decide you want to buy a house. You
look at the entire market with JJ at Branam's Inc. to find your home.
She finds a really cute house currently listed with Joe at "Another Broker, Inc.". You make an offer of $100,000 and it is accepted by the seller.
Typically, the money would flow like this: At closing, Mr. Seller has a
commission of $X,000 deducted from his proceeds. Half that goes to Branam's Inc., while
half goes to Another Broker, Inc..
In Summary:
1. An agent with Branam's Inc. can sell you a home whether Branam's has the property listed or not.
2. In our area, the seller usually pays for your Branam's Agent.
3. In our area, most likely, the seller has an agent working for them (Branam's is one of the very few companies that list our properties as transaction broker and not a seller agent);
Do you really want to buy your next house from an agent that is looking out for the seller?
Call us or Email Us Here. You will be glad to have us on your side.
Branam's Inc. Real Estate & Auctions East Side of Square Holton, KS (785) 364-2606