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How Is My Agent Paid?

Real estate agents who serve buyers typically receive a commission from the sale of the home – which they share with the listing (or selling) agent. In some states, Sales Professionals may receive a pre-negotiated flat fee for services, irrespective of the sale price of the home.

One of the advantages of buyer representation is that you'll have a trained Sales Professional looking out for your interests in the transaction – interests that obviously may vary greatly from those of the seller.

Here are a few basic questions and answers regarding broker-agent commissions.  And as always, feel free to discuss compensation questions with your Real Living Sales Professional.

How is the amount of a real estate commission determined?
A broker determines the fee he or she charges just like a retailer determines the price of a shirt. They look at their costs, overhead, the need to make a profit, and, of course, what their competitors are charging. That fee is stated in the brokerage company's listing agreement. Typically, the commission is a percentage of the eventual sale price of the home. Each broker's fee may vary depending on their operating costs. But regardless of how the amount is derived, be sure you know what the commission will be up front and get it in writing.

Are real estate commissions negotiable?
It might be, but not necessarily. Again, the broker sets the fee depending on what he or she needs to stay in business. Commissions are not set by law. As a homebuyer, however, you usually will not be involved in negotiating the commission. That is usually done between the seller and the listing agent long before you ever appear on the scene.

Is there a time when I, as the buyer, might pay a commission?
Possibly. It is still fairly rare for buyers to independently contract a fee with their agent, but it can be done. Talk with your Real Living Sales Professional about your wishes together you can weigh the pros and cons. Also, however, you could be required to pay your Sales Professional’s fee if you sign an agreement to buy a home – and then back out. Depending on what state you’re in, you could have a legal obligation to pay under your agency agreement.