How are real estate agents paid?
Real estate agents (and the brokers with whom they are licensed) are usually paid a commission. A commission is a fee, often calculated as a percentage of a home's sale price, paid to a real estate broker. The broker then divides this fee, sharing it with the real estate agent and cooperating broker/agent (if any) in the transaction. Payment for real estate services may also be charged as a flat fee, irrespective of sale price.
How are buyer's agents compensated?
It used to be that seller-only agency was "customary" in residential real estate. The real estate commission was thought to be paid by the home's seller, deducted from the home sale proceeds at the time of closing. Real estate agents and brokers represented the interests of the property's seller; the buyer was unrepresented in the transaction – and usually not even aware that this was the case!
This "conventional wisdom" changed in Texas, and across most of America, during the 1990s: without buyers, nothing sells. The real estate commission is derived from the proceeds of the home sale, and is really paid by both buyer and seller. Both parties are entitled to an "agency relationship," and the representation it entails.
With the advent of buyer agency, home buyers are now able to be fully represented by a real estate agent in the purchase of property. In most states, it's rare that buyers would pay their agent/broker directly for services in finding and purchasing a home. If a broker does charge buyers a direct fee, it should be outlined in an exclusive agency agreement that the buyer signs when engaging the broker.
When a buyer is represented by a real estate agent, she/he comes to terms on which services the buyer-client is seeking, and the manner in which the agent will be compensated for providing those services. In most cases, a fee or commission is still derived from the seller's proceeds of sale, and shared between the seller's (listing) and buyer's (selling) agents and brokers.
What does a real estate commission typically include?
Real estate brokers must independently determine their costs of doing business, calculating both fixed and variable expenses. In addition to maintaining their office's business environment, brokers incur many costs as they market and promote their listed properties. Some companies market all of their listings consistently – in classified ads, home books and other print media via television home shows, Internet Web sites and telephone hotlines.
Other companies vary, allowing individual real estate agents to select which marketing their clients will have. Be sure you know what you're being offered. Regardless of how
