How real estate commissions work

bigstock-Money-5164563According to the National Association of REALTORS®, only 9% of homeowners in 2012 sold their home without the services of a real estate professional, and only 12% of homebuyers purchased their home without the help of a real estate professional. With so many people valuing and using the services of a real estate agent or REALTOR®, it is important to know how they are paid. Here’s how it works.

Many professionals bill their clients by the hour, but real estate professionals aren’t paid until the sale of a home is closed, whether they are representing the buyer, seller or both. The real estate professional works for his or her clients for months at a time, but is only paid if the transaction results in a home purchase or sale. If that doesn’t happen, the real estate agent does not get paid.

When a transaction is complete, however, the real estate professional will earn a commission. A typical commission is a percentage of a home’s sale price with that commission divided between the listing agent and the buyer’s agent. Sometimes the split is even, but a different split can be negotiated. How the commission is to be split should be explained in the listing agent’s contract with the seller. The commission is technically paid by the seller at closing, where the fee is subtracted from the proceeds of the home sale.

If you have questions about how real estate commissions work, please give me a call at 253-859-8500. I’d be happy to help!

*Source: How Do Real Estate Agents Get Paid?


Marti Reeder, Realtor, Managing Broker