Typically REALTORS are paid by the seller. Buyers generally don’t pay their REALTOR anything at all!
A common misconception is “when a REALTOR sells a home they get 6% of the sales price” (all commissions are negotiable by law). In theory this is true but what people don't realize is that the commission is split between the seller’s broker and the buyer’s broker. Let's look at the following example of how an agent would get paid on a $300,000 sale at a 6% commission.
Sales Price: $300,000
$18,000 Gross commission to Listing Broker
-$9,000 Given to cooperating Buyer's Agent
$9,000 Gross commission to Listing Agent
-$540 Most large companies charge a 6% affiliate fee
$8,460
-$4,230 Many agents have a 50% split with their company
$4,230
-$635 Let's assume the agent spent 15% of their commission marketing the property
$3,595
-$1,079 Take out 30% for tax purposes
$2,516 Agents Net Income
If the agent sold 13 homes at an average sales price of $300,000 that's $4 million worth of real estate sales in one year! Wow! This agent must be rolling in the dough! But in reality that would equate to a net income of $33,500 for the entire year. And that does not include any other costs such as buying office supplies, gas and other business expenses such as magazine, newspaper and direct mail ads.
Also, we work on a contingency basis - we are only paid if and when a deal closes. So if a buyer's financing falls through or there's a problem with the title and the sale doesn't close, the agent isn't paid... period.
For these reasons, it is imperative that I deliver incredible customer service to you as my client! Anything less would be detrimental to my business and I walk away with absolutely nothing to show for the time and money that I have invested except a bad reference, those destroy careers and I just can't afford that! |