Often, people who are starting the process of purchasing
real estate have little or no idea how their agent gets paid. Do the buyers pay
the agent? Does their pay come out of the selling agentâ€™s pockets? Are agents paid by the
agencies? If so, which one, buyerâ€™s or sellerâ€™s? Just how are those people compensated
for all the time and effort they put in to find you the perfect house?
It is a great question. And the answer is relatively
Generally speaking, both the agent for the seller and the
agent for the buyer are compensated from the commission paid by the seller when a home
is sold. Hereâ€™s how it works.
The owner of a home contacts a real estate agent, asking
that agent to list and sell this home. The agent and the seller agree to list
the home at a certain price, and also agree that when the home is sold, the
seller will pay the agentâ€™s brokerage (the agency affiliated with the agent) a commission
for selling the home. That commission is a percentage of the sale price,
usually 5 or 6 percent, though it can be more or less, depending on what the
seller and the agent agree to.
Say the home sells for $200,000.The sellers agreed to pay
the brokerage 6 percent of the sale price when the home is sold and title is
transferred at settlement. Six percent of $200,000 is $12,000.
Of that $12,000, the agent and broker who list the house
have agreed to split or share that commission with the agent who represents the
buyer and that agentâ€™s broker (the agency for which the buyerâ€™s agent works).
That split is generally 50-50. Half of the $12,000 would go to the sellerâ€™s
broker and half would go to the buyerâ€™s broker. Each broker would then get
Each broker or agency would then pay a predetermined
share of the $6,000 commission to the agent for the seller and the agent for
As you can see, the commission paid by the seller at
settlement is divided four ways, between the sellerâ€™s agent, the broker for the
sellerâ€™s agent, the buyerâ€™s agent and the broker for the buyerâ€™s agent.
If the home does not sell, nobody gets paid.
Have a question about real estate in
Bucks or Montgomery counties call, email or text me.
Coldwell Banker Hearthside
Office 215-794-1070 Ext. 117