How do Real Estate Agents Get Paid?

25/05/2022 22:12

Whether you are in the market to buy or sell a home, you are likely to work with a real estate agent. If you are wondering how or who will pay the real estate agent, the answer is that real estate agents are paid in a commission that is calculated on a home’s buying or selling price. How much the real estate agents make in a year depend on the number of transactions they complete in a year.

What is a Real Estate Agent Commission?

Real estate agents earn money through commissions. Commissions are direct payments to real estate brokers as compensation for services rendered during a purchase or sale of a property. While the commission can be a flat fee, in most cases, it is a percentage of the selling or buying price of a property.

How does Real Estate Commission work?

The brokers pay is specified on the listing agreement a documents that acts as a contract between the listing broker and the seller. The listing agreement consists of all conditions and details of leasing. The broker’s rate of commission is negotiable. It is unlawful for any brokers to impose a uniform commission rate on all transactions. The commissions mostly range between 4% and 6%, and maybe higher or lower, depending on the transaction. For instance, commission on houses for sale in stouffville will be different from housed in Toronto.

How are Commissions Shared?

Commissions are often divided between various real estate personnel. In a basic real estate transaction, the split goes as follows;

The listing agent – the agent who gets the listing from the seller.

The listing broker – the one who hires the listing agent

Buyers Agent – real estate agent who represents the buyer in the transaction

Buyer Agents broker – the broker who hires the agent of the buyer.

It is essential to note that real estate agents only get paid when a deal is closed. However, there are situations where the seller or buyer is liable to pay the agent even if the transaction was not completed. Always lead the contract and understand the contents before getting into a transaction.

 

 

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