Compensation in Real Estate

Ever wonder how real estate agents are paid for their services? Here are some takeaways:

Compensation is always negotiable.

At the start of the homebuying process or at any point as agreed upon by the parties, buyers and sellers have the option to negotiate compensation.

Costs are spelled out to buyers and sellers.

As part of the written listing agreement, sellers decide what fee they are willing to pay for their agent’s services and how much of that fee goes to the real estate agent who finds the buyer. Buyers‘ agents tell their clients how much of their compensation comes from the total proceeds of the sale. At closing, both sellers and buyers are reminded how much each agent is being paid and by whom.

Agents only get paid if the home sells.

Listing agents are typically paid from the proceeds of the sale. Then, they pay the buyer agent’s compensation. This payment model is crucial to ease the cost of purchasing a home and help more Americans access homeownership, especially for first-time buyers.

There are no standard commissions or service offerings.

Compensation varies based on service, consumer preference and the free market.  It is also important to note that there are different types of agents with varying commission structures and levels.