You have received good answers from the other agents, but one thing that may help you is to try to spend a couple of days with your closing department people (if you have one in-house).
I worked behind the scenes for many years, in closing, mortgage processing, title work well before I stepped forward into being a front-line Realtor. This experience was invaluable, in that I know what needs to be done on the 1st day of a transaction and how it can impact the last day at closing....
I mentor new agents, and always encourage them to get some knowledge of the closing and title process. They don't teach that in Real Estate licensing classes.
Good luck in your new career!
If you are the buyers agent, you probably want to get a buyer brokerage agreement. Just advise the client that your commission will be paid by the seller, unless they chose to by unlisted property where the seller refuses to pay your commission (very rare). I recommend always using the MLS for showings, because the sellers have already negotiated paying the selling agent's commission.
Best of luck on your new career. Keep asking questions. You do your clients, yourself,and our industry a great service by giving correct information.
This is a good question to discuss in an open forum like this. Most folks do not understand the way Realtors get paid and they are even more unaware of the numerous subtractions that will reduce your net income. Few Realtors if any actually walk away with the full commission that they negotiated on their Listing Agreement. It is usually split with the cooperating agent as payment for bringing in a qualified buyer and seeing that their end of the transaction runs smoothly. A Realtor may have many deductions taken from their commission. The true dollar amount for many Realtors will be significantly diminished once these deductions have been taken.
good luck, Lisa
Since you are a new Agent in PA, I think who pays commission is a very basic, fundamental, required to know agent knowledge that you should has your Broker to explain. You do need to have a Broker so you can get paid either way - the commission is paid to the broker not individual agent.
See the answers from below and go back and ask your Broker to explain that to you. Hopefully you have found a brokerage which emphasizes on training and helping new agent through their transactions and the whole firm has a spirit of supportive and team work.. That's what I looked for when I first got started.
No such thing as a stupid question.
On page 2 of the HUD-1, right at the top is the breakdown of the commission.
This is usually considered a debit to the seller.
Since you are a new agent I would suggest you have a mentor in your agency (A high producer but not necessarily the highest) and tag along to a couple of closings.
My first deal I got lucky my mentor was the the other agent and I learned a lot plus after the closing we had lunch and he explained all about the HUD.
Also while we are on the subject try to tag along as an "associate" on listing presentations and also get a cheat sheet for sales contracts. Since they seem to be changing the contract every few months at my board I still get to use a cheat sheet that's updated with the changes.
Good Luck and Welcome to Real Estate
JD â€œDanâ€ Weisenburger, GRI
Vanguard Realty, Inc. GMAC Real Estate
The monies paid in brokerage fee is set in the contract between the seller and the lisitng brokerage. That money is shown on the closing statement (HUD 1). The closing statement shows the balance of all monies exchanged in escrow. It shows the sellers loan pay off and the buyers new loan, all fees and cash and the brokerage fees.
Remmeber that the seller sgrees to pay the brokerage fee and does that with money brought to the table by the buyer.
Also remember that it is usallly an agreement between brokerage companies that allows for a commission to be paid to the selling (buyers side) agent. If you don't belong to a brokerage that participates in an MLS or has copoerative agreements you need to be sure to get an agreement form the listing agent in writing prior to ratification of the contract.
If the buyer has entered into an exclusive buyer agreement with an agent the buyer may actually end up owing money to pay commissions at closing if they have agreed to pay more than the seller is willing to compensate. E.g. the seller is offering 2.5% and the exclusive buyer agreement with the buyer agent is at 3%. Most of the time buyer agents will take whatever the seller is offering.
Once I was at a difficult closing with my buyer where we were still negotating some walk-thru issues with the seller and the attorneys. The seller turned to me and said "Don't forget who is paying your commission!" Since I did not have a buyer agency agreement with that particular buyer, it made me ponder who are we representing. Since agency representation is a big issue, we need more clear cut rules. In the travel industry, travel agents represent the carriers, since they are the ones paying the commissions. I got a big fat refund on an overcharged airline ticket once because it was deemed that the agent did not have my best interest in mind because the carrier paid her the commission. Food for thought!!!