Anthony Chin, Other/Just Looking in Katy, TX

Where does the 6% commission go in a trsnsaction?

Asked by Anthony Chin, Katy, TX Sat Sep 5, 2009

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Angela, of course you may have ice cream, a nice big scoop....with whipped cream, too if you like.

Uncle Sam may have his bite of my pie, I have no choice - he's that annoying little relative that always shows up.......... but I refuse to him him even a spoonful of my ice cream! I'll let it melt before he can have it.

Glad you're getting your much needed rain down there in TX !
1 vote Thank Flag Link Sun Sep 6, 2009
Hi Abcinusa
Angela did an excellent job of explaining the commission split in a transaction..

Bacially, think of a pie - cut it into 4 pieces. That's how the commission usually gets divided up! The slices of pie, howver, may not all be the same size!!

Each of the 2 brokers in the transaction will share their "slice of the pie" with their agent.-- that makes 4 slices of pie all together!......Great - .now I am hungry for a piece of blueberry pie!!
1 vote Thank Flag Link Sat Sep 5, 2009
Hello Abcinusa,

The 6% Commission is paid to your listing broker for the marketing and successful sale of your home. The lising broker will split that commission with the Broker who brings the successful buyer. Whether it is an even split or an uneven split, is up to you and your agent.

In Texas, all fees are negotiable. Be sure to read your listing agreement if you have one, as those commission offerings are clearly expressed in the contract. Your Realtor should go over the Listing Agreement with you in detail.

Sometimes, the Listing Broker will receive 3% and the Buyer Broker will receive 3%. Others, it will be split 2% and 4%. However, it varies in every market and even from Broker to Broker. Even the 6% is negotiable.

Have a great weekend!
1 vote Thank Flag Link Sat Sep 5, 2009
Commissions are like any paycheck.... the total percentage is gross and we have to consider the net. With real estate in our area of Katy, the seller lists with his agent and agrees to pay a commission % of the sales price (which could be anything agreed to between agent and seller). The seller's agent in that agreement agrees to surrender a portion of that (many times half of the gross total) to the agent that represents the buyer to the property as compensation. This is also set out specifically in the local MLS (Multiple Listing Service) as an incentive to show the property and to avoid any conflict regarding payment at closing. (In fact, most MLS rules requires that cooperative compensation be specific.) After the split, the agents will then pay a portion to their Brokerage according to their independent contractual agreements with same (and this could be anywhere from zero to half of the entire amount).This fee compensates the broker for advertising, office space, marketing, training, etc. At that point, the agent must pay good old Uncle Sam and any personal office expenses he/she may have to run her real estate business (assistants, copies, marketing, flyers, virtual tours, Open House expenses, etc.) I think it is so important for sellers to understand that the succesful listing and marketing (not to mention time spent negotiating on their behalf and shepherding a contract to closing) takes time, money and effort on behalf of both agents and if they are a good at what they do... it is well worth it.
0 votes Thank Flag Link Sun Sep 6, 2009
In Texas,in Residential Real Estate Listing Agreement Exclusive Right to Sell in paragraph 8 "Cooperation with Other Brokers" there are areas where should be entered information how other broker (representing home buyer) will be compensated. Since real estate commissions in Texas are not fixed but always negotiable, so for example if agreement between Home Seller and the Listing Broker on the total commission is 6%, then usually half of this ie 3% is entered in paragraph 8. Sometimes though, different percentage amount is entered there. It doesn't mean that each agent (ie seller's agent and buyer's agent) gets 3% commission. Usually each agent is sharing the 3% with his or her broker, depending of the agreement they have with the broker regarding their commission split, in many cases it is 50/50 which means that each of two agents gets 1.5% of the 6% commission. This 1.5% commission is of course taxable, it also includes the all the fees each agents pays up front for helping their client either sell the house or buy the house. For example listing agent has to pay out of his/her own pocket up front for marketing the house ie flyers, post cards sent to their sphere of influence to promote the house for sale, advertisements (if any) in newspapers, cost of property professional photos, video, virtual tour, open houses etc........
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0 votes Thank Flag Link Sat Sep 5, 2009
Pass the pie please! Can I have a dab of vanilla ice cream too? YUM!

Debbie that was really good.

Abcinusa, I failed to mention the Broker/agent split. That is a good piece of the pie to understand. Many people believe their agent walks away from the deal with 2,3,4% commission. But she explained an important piece for sellers to know.

There are even more pieces...haha...but I'll spare you the grief! Okay...a glimpse...So I, the agent, carry my Broker's piece of the pie back to the office to split. My Broker gets a piece, Uncle Sam gets I nice piece, and I get the final slice! MMMmmmm! Ice cream would be the occasional bonus! Did Uncle Sam want Ice Cream too? Oh yes! Do share! :)
0 votes Thank Flag Link Sat Sep 5, 2009
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