Real Estate Agent Commission Explained – Basic Guest Post


Homeowners can choose to sell their properties for various reasons, including vacant houses, expensive repairs, divorce, retirement, probate, and the need to sell a property quickly. If you live in Indianapolis, Christopher Ellyn Homes will buy your property no matter what condition it is in. Selling a property through an agent will free your hand from expensive marketing and paperwork. You will also get an amount close to the market value. However, it may take anywhere from 3 to 12 months to sell your Indy house. Real estate agents earn their upkeep through commissions, which are paid once the transaction is complete. The commission is split among the listing and buyer’s agent and broker based on the agreement. Here are five things you should know and keep in mind about real estate agent commissions:

How much do realtors charge

Real estate agent commission can vary widely depending on the property location or city. The average real estate commission is capped at around 5.7% all across the United States of America. Since the commission is negotiable based on the adopted structure or commission split, some agents may choose flat rate commissions while others may go with fixed-rate commissions. The state of the home can also determine the rate of commission. For instance, certain homes may be easy to sell because little or no work is required. The seller and realtor can agree on fees and dates before-hand to make the process smooth and efficient.

Types of real estate agent fees

Real estate commission is charged on every property sold by realtors. The real estate agents often charge a commission based on either a flat fee or tiered commission structure. The flat fee refers to a fixed commission. Under this payment structure, the agreed real estate commission will stand regardless of how much the property is sold. Each state uses a different formula to set the fee; however, the rate is usually determined by the local housing market conditions. Therefore, a favorable market will see a property sold at much higher prices, thereby earning the agent a higher flat-rate. The tiered commission, also referred to as a negotiated commission, is widely seen as a rewards system offered to the agent to find the highest price possible for a marked real estate property. A realtor commission may rise depending on the final selling price and the accord on the sliding scale.

Real estate commission split

A quick look at the commission received by real estate agents reveals an attractive compensation, but there is more to this assumption. The commission is usually shared among different parties: the listing agent, listing broker, buyer’s broker, and buyer’s agent. A listing agent is a party who takes over the listing from the seller while the buyer’s agent represents the buyer’s interest in the property deal. Listing agents do many things, from consulting with the property owner to preparing the property for sale. Realtor commission is usually paid to the listing broker as dictated by the law. This amount is then split on a 50:50 basis between the various brokerages representing the buyer and seller). Additional splits may take place depending on the agreement between the individual agents.

Who pays the realtor commission?

The seller traditionally pays the commission earned by the respective real estate agents. Recently, there has been a proactive move to challenge this long-standing rule at the federal court.  The property buyer and seller’s commission usually is presented in a document called Settlement Statement. This statement indicates commission and closing costs. Another document called a Disbursement Authorization might be issued to authorize the closer to paying the agent directly when closing the sale. Ordinarily, the closer will give a check to the agent’s brokerage, who will then be remit a share to the other parties.

How much money do real estate agents make in a year?

Real estate agents are independent contractors who enjoy no benefits, but they are expected to cover all the legal liabilities that come with “operating a business.” Housing statistics show the average real estate agent earns about $60,000 a year. Although the pay is slightly higher than what an average American makes, realtors have to shoulder unusually high expenses that eat into their commissions. Realtors often face stiff competition from other agents and may work fewer hours in a day which translates to a lower hourly rate. This is perhaps the reason many realtors choose to quit their job within the first two years.



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