How Does a Real Estate Agent Get Paid?

Oh no, the dreaded commission talk that many agents fear. It’s such a taboo conversation amongst ourselves, that we don’t want the public to know that we actually make……wait for it……MONEY! We do. We make money. It’s a true story. 🙂

I know it sounds funny, but we do avoid talking about it, and why? I’ve even been guilty of being squirmy about talking about it to sellers and buyers in the past, but not anymore. I’m gonna spill the beans on this tightly held and never to be talked about secret.

Here goes. The juicy details……..

I work on commission only. No salary. No hourly wage. I do not get paid, unless we get your transaction closed. That means I spend my own money for advertising a home for sale. I show homes without getting paid, unless you buy a house and it closes. If I’m working for the seller, my commission is paid at closing from the net proceeds. As a buyer’s agent, my commission is paid by the listing broker for bringing a ready, willing and able buyer to the closing table for their listing. Builders will pay a buyer’s agent and most cases, not all, a for sale by owner will pay it as well.

If you have ever bought or sold a home before, I’m sure you have seen the amount the broker and/or agent is paid, when you have seen the HUD (closing statement showing a breakdown of all costs pertaining to the transaction). I know you may think wow, that agent is loaded and rolling in the dough! Well, let me break that down a little bit as well. Most transaction involve two different real estate companies, who usually split the total commission 50/50. Not always, depends on the listing agreement. Now once that’s split up, it doesn’t all belong to the agent. That amount is split between the agent and their broker depending on their contract.

Now the agent gets their check and since they are self employed they get taxed at a higher rate, so they need to take that out and put aside. There’s advertising costs, member and MLS costs, insurance, and more, plus the same expenses as you have. Mortgage payments, utilities, kids and etc…

 I’m not telling you this so you can feel sorry for me, or to cry me a river. It’s a great career and it’s my choice to be in the business. My reasons for telling you is so that you know who is paying the commission (in most cases) and to squash any misconception the public has, on the amounts they think we are paid or the misconception that we are paid too much. You never know unless you ask right?

Now that we got THAT out of the way, are you looking to buy? To sell? Both? I can help you with those. Just shoot me an email at pam@pamgraham.com or call me at 904-910-3516.

Want to check out some more blog posts? I got some for buyers and sellers.