Ann Smith
Broker


Platinum Award Recipient

519.697.3544
519.433.4331
1.866.851.1534
Fax: 519.433.6894
Email: ansmith@sympatico.ca

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How Real Estate Agents Get Paid

By Ann Smith

In our recent hot real estate market, many people believe that Realtors are raking in the cash.  But that’s not necessarily true. 

Real estate agents are paid on a commission basis, determined by the selling price, when the property sale is complete.  In many sales, two real estate firms are involved in the transaction and commissions are split four ways – between the two agents and their respective brokers.

Commission rates are negotiable but commonly range from 5% to 7% of the sale price. The agent typically splits the commission equally with their broker (this can vary).  For example, if you sell your house for $200,000, and you’ve agreed to pay your listing agent 6% commission, the commission paid is $12,000. The listing agent typically splits the commission with the selling agent, so they both receive $6,000.  But then both agents split their portions with their brokers, so they take home $3,000.  But it’s not really take home pay.  You see, all expenses must come out of the real estate agent’s commissions.

Expenses include office overhead costs such as telephone and paging fees, computer associated fees, errors and omission insurance, and Multiple Listing Service access.  Plus, there are extensive advertising fees for the property and vehicle expenses.  In the end, your agent is not taking home anything close to the 6% you agreed upon.  

Selling a home, even in a hot market, takes work.  Some of the duties of a real estate agent include:

·         Evaluating market conditions and establishing a selling price that is attractive to both the buyer and the seller.

·         Advertising the property in local newspapers and magazines, Multiple Listing Services directories, and Web sites.

·         Qualifying prospective buyers.

·         Showing the property to individual prospects and during open houses – at times convenient to buyers and sellers, not the agent.

·         Negotiating with prospects.

·         Advising the seller on Offers to Purchase. 

It’s important to remember, that if a property does not sell, the listing agent does not receive compensation.  But, the expenses still have to be paid and are equivalent to a sold property. 

Selling real estate is a demanding career, but one that a true professional finds extremely satisfying – in any type of market.

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