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How Do Real Estate Agents Make Money?

Karla Painter, Realtor®

June 28, 2023

The short answer is, it varies. Some agents work for a broker that pays some level of base pay, but typically, that is not the case. While a common assumption is that working as an agent comes with a steady paycheck and costs covered by a company, being an agent doesn’t work that way. For our team specifically…

It’s All Commission, Baby

That’s right! 100% of the money we make is from paychecks when closing a transaction. Real estate is a sales industry, and we don’t make a penny until we see the transaction through to the very end. This is why agents will have you sign a contract before providing any advice or taking you to see homes.

Agent Fees

So where does the commission come from? Real estate agents charge a fee for their services. This fee is a percentage of the final sale value of the home. The number varies agent to agent, and for some agents it varies depending on the size of the transaction (a larger sale might mean a smaller percentage fee). Our team will present the sales fee to you during the initial meeting (see sellers timeline.) Typically, the final commission is split between the buyers and sellers agents.

It is important to keep in mind when choosing an agent to focus on many other qualities besides their percentage fee alone. Agents will charge a higher fee when they provide more services – you get what you pay for!

There are exceptions to the percentage fee rule. Some agents may choose to charge a flat fee for their services rather than a percentage. It should be noted that these agents do not have a financial incentive to increase the sales price of your home or negotiate on your behalf.

What Costs Do Agents Cover?

The fee you pay doesn’t go to nothing! Most real estate agents cover their own costs to do business. This includes, but is not limited to:

In Conclusion

Real estate is a full-time sales gig with pay via commissions. If you have any questions regarding fees, we’d be happy to explain all the services we offer during your free consultation prior to listing your home.

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