Commissions of realtors

I'm writing this article for informational purposes only. Every scenario varies slightly but I want customers to understand what is going on and know that this information is not confidential.

Who wants to know what Realtors make?! This is especially important to buyers (or unimportant really) because buyers do NOT pay their representative(s). The seller is solely responsible for paying out commissions to both sides, the listing and buyer's agents.

1. A listing agent will negotiate a commission with the seller when he or she lists the house. This is usually between 5%-7%.
2. The listing agent then puts the property on the MLS and advertises a 50-50 split in commission, 3% for the buyer's agent (an incentive for us to provide a buyer) and 3% for the listing agent (if the commission is 6%).

Example: So on a 6% commission on a $100,000 house, the listing agent's broker will get $3,000 and the buyer's agent's broker will get $3,000.

3. The broker (the company that the agent works for) then takes its cut out of the commission and give the agent the remainder.

The cut of the broker varies greatly depending on what company an agent works for. It can range from 50% to 97.5% or the broker can take a flat fee per transaction, or both a percentage and a flat fee.

4. The agents are then left with approximately their $3,000 minus a 5% cut from the broker ($2,850) minus a $300 flat fee ($2,550).

Lastly, Then, you have to consider the time and effort the agent put into the sale. Sometimes, it's only a single visit and unlocking the door, other times it take 15 showings, 150 miles driven, and a great number of hours including document prep time and paperwork.