First let’s start with what a real estate commission is. Many professionals charge by the hour, real estate agents typically work for a commission, or a percentage of the money exchanged in a final transaction. Real Estate agents are paid only when the deal closes! Many people don’t understand that if you are not successful in buying or selling your home, your real estate agent does not make any money.
So even though your agent showed you twenty homes or brought in twenty potential buyers. If there is no deal, then there is no payment for the agent.
In residential home sales, the total real estate commission paid by the seller is typically between 5% and 7% of the sale price. This amount is split between the companies the agents work for, representing the buyer and seller. Each agent then receives a portion of the commission split from the broker. So, the commission is generally split four different ways.
Some figure to sale their home without an agent hoping to keep a larger share of the profits. The national association of realtors have completed numerous studies, and what they have concluded is that many who sale their home For Sale by Owner are generally taking more than a 22% price cut for their home. You may have gained 3%, but you lost approximately 22%. Do the math!
By R. Jones
