When you buy or sell a home, the real estate agents involved get paid through a commission structure. Real estate commissions are typically a percentage of the property sales price. For example, if you buy a house that is listed at $200,000, the total agent commission would be $12,000. That amount gets split between the listing agent and the buyer’s agent. In some cases, real estate agents can negotiate a larger share of the commission.
Generally speaking, real estate agents don’t get paid on a weekly or biweekly basis like most employees. Instead, they work on a commission-only basis and earn their paycheck at the time of the home sale. However, some real estate agents, such as those employed by companies like Redfin, receive a base salary plus bonuses.
Most home buyers don’t pay any commission directly to their real estate agents, though. They’re responsible for paying all the other costs associated with buying a home, such as the mortgage origination fee, loan application fees, lender-imposed inspection and appraisal fees, closing costs, and HOA or condo association fees. The average real estate commission rate nationwide is 5.49%, but fees vary widely by agent, brokerage, and home value and type. For more info https://www.naples-group.com/we-buy-houses-northampton-ma/
In general, the home seller covers the agent’s fee as a way to attract more buyers and speed up the sales process. It’s also a way to offset the cost of the sale and reduce the amount of cash that home buyers have to cough up out of their own pockets.
Even so, the buyer’s agent’s commission is still a significant chunk of the overall sales price, and it can easily price some buyers out of the market entirely. That’s why it’s common for real estate professionals to include the estimated buyer’s agent commission in their asking prices.
Real estate agent commissions are paid out at the time of closing and are deducted from the home seller’s proceeds. They’re then split between the sellers’ and buyers’ agents (and their respective brokers). Historically, homesellers haven’t had any say in how much they pay their agents, but a recent settlement agreement with the National Association of Realtors could change that.
Since a home purchase or sale is a large transaction, you’ll want to negotiate the commission fee to make sure it’s fair for everyone. To do so, make sure you understand how real estate commissions work and what your agent’s broker’s policies are regarding commissions. Additionally, be prepared to offer a counteroffer to the standard commission. Regardless of how you decide to handle it, you’ll want to stay in communication with your real estate agent throughout the process to avoid any surprises down the line.