How real estate commissions work | Erik Brown

What Kind of Commission Do Most Agents Make?

Your local real estate agent, Erik Brown, and I was recently asked a question from one of my clients that I get asked fairly often, and that is how do commissions work? How is it that you get paid, and there are various ways that questions can get answered or broken down?

I’ll try and break out the mysteries of a commission check the way that Commission’s work. As I said, it can vary based on different markets. Most agents will work strictly on a percentage. Some agents will try and work off of a flat fee or also off of a retainer, and that’s based on their marketing expenses, and that can be a dollar figure based on any hard costs that the agent wish to portray most agents are going to work with the primary portion of their payment based on a commission percentage of the sales price.

So whatever the sales price may be, a percentage of that will go towards payment to the agent in that payment or percentage can range I’ve seen as low as four percent and as high as ten percent and each market will have its averages and that average will be dependent upon how good the agent is the better the agent, the more that they get paid.

It’s kind of like the difference between shopping at, say, Walmart for any of your products or shopping at Nordstrom or Bloomingdale’s. There’s just going to be a difference in the product you receive and the price you get it, for I’ll work off a fairly typical commission percentage of six or seven percent.

A buy-side commission will be paid out of that overall commission, which, generally is about forty to fifty percent of the total so, if an agent is getting paid seven percent as an example, three-point-five percent of that may go to the buy-side the other three-four points five percent is going to go to the list side agent within that three-point-five percent and again if it’s an expensive house.

You could be looking at tens of thousands if not hundreds of thousands of dollars in commission percentage, well out of that. The real estate agent is going to pay for potentially marketing costs, brokerage costs, any labor that they have for their staff taxes, any payroll issues just running their business, and then the profit for running that organization or that overall transaction if you have any additional questions on our Commission’s work.

I’d love to get into the details. I deal with it every single day, and as always, if you ever want to know how that commission would affect the value of your home thou looking to buy or looking to sell, and you’re just looking for some extra information on what home values are going for in your area, please feel free to give me a call or shoot me an email anytime I’d love to help.

Compass

Erik Brown

Realtor/ Broker (BRE: 01958545)

Beverly Hills: 424-239-6519

Minneapolis: 612-294-0447