REALTOR Compensation

HOW AGENTS GET PAID

When a Seller puts their property on the market and hires a real estate agency, they agree to pay a certain commission, based on the final sale price– typically anywhere from 5-10%, depending on the property, the type of marketing most appropriately needed, and office policy. That compensation is not due until the property is SOLD and usually comes from the Seller's proceeds. Meanwhile, when that agency posts the listing information on the MLS (Multiple Listing Service), they agree to share a specific % of that total compensation, upon closing, with any other member agency who brings the qualified buyer to the table. TLC Real Estate firmly believes that a fair & equitable 50/50 split with the Buyer Agency is the best approach to encourage Agents to bring their buyers to TLC listings. So, essentially– both agencies and therefore both agents' paychecks are paid out of the Seller's proceeds. There are occasional circumstances where the Buyer agrees in writing to be responsible for part or all of a specified commission– such as in the case of a low commission offered by a Listing Agency or a For Sale By Owner, but in the majority of transactions, including FSBOs, the Seller pays the commission. 

How does it break down from there?

SAMPLE COMMISSION FEE STRUCTURE

  Sample 6% on a Residential House w/ a 50/50 Split

LISTING AGENCY: On a sample 6% commission, will earn 3% on listing side w/ sale. Offers 3% to Buyers Agency, stated in MLS. BUYER'S AGENCY: Will receive 3% upon successful closing, as stated in MLS.
ALL MARKETING, property prep consultation, showing coordination & follow-up, negotiations, inspection/repair/appraisal process, transactional services to closing. Buyer qualification, property research, tour routing & scheduling, home showings, negotiations, inspection/repair/appraisal process, transactional services to closing.
Upon closing, Agent takes check for 3% of sale price to Broker. If a Franchise, a % is subtracted for a Franchise fee (for access to
national resources/branding).
Upon closing, Agent takes check for 3% of sale price to Broker. If a Franchise, a % is subtracted for a Franchise fee (for access to national resources/branding).
Broker splits remainder w/Agent on pre-determined split & cuts Agent a pre-tax paycheck. Broker splits remainder w/Agent on pre-determined split & cuts Agent a pre-tax paycheck.
Listing Agent Finally Gets a Pre-tax Paycheck minus ongoing time and effort incl. pre-listing CMA research, interviews, listing prep and meetings, marketing prep & implementation, client communications, ongoing marketing time & financial investment, inspection/repair/appraisal/coordination, transactional services & sole proprietor expenses, gas, supplies, insurance, license fees, MLS & key fees, equipment, communication costs, general business marketing, overhead etc...+ income tax.

Buyer Agents Finally Gets A Pre-tax Paycheck minus ongoing time and effort qualifying & working with buyers, client communications, inspection/repair/appraisal coordination, transactional services & sole proprietor expenses, gas, supplies, insurance, license fees, MLS & key fees, equipment, communication costs, general business marketing, overhead etc...+ income tax.