Caroline Ashe Your Source in Augusta, GA Real Estate August 4th, 2012
How does my real estate agent get paid? I run into this question a good bit by first time home buyers. The technical answer is, it depends. The typical answer is it comes out of the sellers proceeds. When a seller lists a property with a real estate agent they agree to pay x% of the selling price or a set fee to the agent. This amount is deducted from the equity that the seller is paid. When the agent lists the property on the MLS (Multiple Listing Service) they agree to a portion of that percentage or set fee to the agent that closes on the property. I would guess in about 90% of transactions this will be the case.
The other 10% are for agents paid by the hour or if you should purchase a For Sale By Owner. There is a new thought on agents being paid by the hour. They can pull the money again from the agreed portion of the fee or they can charge the buyer directly. On the surface this might not seem like such a great deal for a buyer, but wait it has some perks for you. They will work as many or as little hours as you need them. If you know exactly what you are looking for in a home, find it, and buy it quickly, besides the phone calls and paperwork you might save yourself a couple grand that you can in turn use to negotiate the price of the home!
As for FSBO’s they have listed their property without an agent usually for a reason, either they want to save money on a commission or they do not have enough equity to pay a real estate agent. In this case paying your agent can happen one of two ways, first they can negotiate for the seller to pay the commission or you can pay them.
Remember, unless your paying by the hour your agent only gets paid when you sit down together at the closing table.
It can be argued as well that the buyer always pays the commission. Think about it…who gets the new loan to buy the house? With all the numbers wrapped into the sales price the buyer pays it indirectly. Same with any other consumer product…the buyer pays for everything.
This formula of commissions has been around along time and like I said I would guess about 90% of homes sold have a fee for a real estate agent built in, so join the club!
Do you have other commission questions? I am happy to answer any questions you have, in detail.
Tags: buy a house, buying a home, how does a realtor get paid, paying real estate commissions, real estate commission, who pays the commission
