If you’re considering a career in real estate, you’re probably wondering how real estate agents get paid and how their commissions are calculated. The amount of money an agent makes depends on numerous factors. Some of these are the number of completed transactions, the type of properties sold, and the commission split. So, how do real estate agents get paid?
Who pays the real estate agent?
Most real estate agents earn money through commissions from property leases and sales.
The commission is typically paid by the seller of the property. The money is split between the sponsoring broker and the agent, in accordance with the agreement between them.
How is the commission calculated?
The commission is usually a negotiated percentage of the sale price of the property.
The most common commission is 6%, split 50-50 between the seller's broker and buyer's broker, so that 3% goes to each of them. Then, the money is split between the broker and their agent. Typically, each of them receives 1.5%.
The percentage depends on the type of property, the location, the market conditions, the agreements between brokers and agents, and more.
How do the commissions work?
Since you know who pays the real estate agent, it’s time to discuss how the commissions work. They are generally paid at the closing of the sale, after the buyer and seller have signed all the necessary paperwork.
Real estate agents aren’t paid until the deal is closed.
How much can real estate agents make? A real-life example
As you can see, the real estate agent commission is a key factor in how much money real estate agents make.
For example, if an agent sells a house for $200,000 and the commission is 6%, the agent will make $6,000. Of that $6,000, $3,000 will go to the agent and $3,000 will go to the broker.
If the deal falls through, the agent won’t get paid. Let’s learn more about this next.
Want to read more about salaries of real estate agents? Check out:
What if sales don’t close?
How are real estate agents paid if the sale doesn’t close? If the real estate agent doesn’t close any deals, they usually don’t make any money.
In order to make a good living as a real estate agent, you need to constantly improve your skills. Discover new lead generation tips to be able to finalize transactions on a regular basis and earn the commission you deserve.
There are also situations when real estate agents employed by brokers receive a regular salary or when sellers are liable for commissions, even if the sale doesn’t close. That is usually dependent on the sales agreement signed between the selling broker and client.
Other payment models
How are real estate agents paid if they don’t receive regular commissions? In some cases, real estate agents may get paid in other ways.
For example, they may receive a salary, a bonus, or a commission based on the number of leads generated.
It’s also not uncommon for agents to get paid a flat fee for their services.
there is no one-size-fits-all solution. The payment model depends on the agreement between the real estate agent and the broker.
The takeaway
Now you know how real estate agents get paid. The commission is the most common way for agents to make money. It’s usually a percentage of the sale price and is paid typically by the seller at the closing of the deal.
In some cases, agents may receive a salary, a bonus, or a commission based on the number of leads generated. It's worth keeping in mind that the payment model depends on the agreement between the real estate agent and the broker.
