You might already know that real estate agents make 100% of their money from commission. This commission depends on the price of the home, however, approximately 6% of the total cost of the home will go towards REALTORS fees.
But how does real estate commission really work? Who receives the commission — the seller’s REALTOR or the buyer’s REALTOR? And most importantly, where exactly is your hard earned money going?
Below, I break down the real estate commission structure so you are informed every step of the way when selling and/or buying a home.
Let’s pretend you are selling your home for $400,000. As mentioned above, an experienced listing agent will agree to a 6% total commission, half of which will be given to any agent that procures the buyer for the home. In this case, the commission total would be $24,000. When escrow closes and the sale is final, the agreed REALTOR fees are paid to the listing brokerage, and then distributed between the listing agent and buyer’s agent. The listing brokerage usually keeps a portion of the commission, in exchange for providing resources to the agent that assists in getting the home sold.
While the above information is a general outline of real estate commission there are exceptions that vary depending on, for example, what State you live in. Contact me today to learn more about the commission structure in your area.
