How does a realtor / real estate agent or broker get paid? Who pays them? Recently a good friend of mine who is going to be a first time home buyer very soon asked me “how does it work if I want you to start showing me homes? How does a realtor / real estate agent or broker get paid? Do I pay you based on the times you take me out looking at properties or homes? It then dawned on me that maybe it’s not so obvious to people exactly how realtors get paid. Especially if they haven’t worked first hand with a realtor before. Often times in the sale of a property there are 2 agents involved in the sale (a listing agent who represents the seller and a buyers/selling agent who represents the buyer). Sometimes one agent can represent both sides (buyer and seller) but it’s more common for each side to have their own representation.
Does each party pay their own agent? NO! How it typically works is the seller pays both agents commission. When the seller lists their home for sale with their agent they agree on the total commission they are willing to pay for the sale of their home (which is completely negotiable). Typical commission rate is 6% but it varies and could be higher or lower. However for the purposes of this example let’s use 6%. So the seller agrees to pay a 6% commission and then the listing agent typically offers out through the MLS (Multiple Listing Service) half of the total commission to the buyer’s agent to entice them to bring their good qualified buyers to purchase the home. Again, it varies and is different in every situation but often times the two real estate agents or brokers split the total commission the seller agrees to pay.
So what does that mean for you as a buyer? It means it’s FREE to work with a professional realtor or agent when you are buying! So if you’re thinking of beginning your house search, go get pre-qualified with a lender (I have a great recommendation if you need one) and go find a strong agent or broker to represent you who knows how to negotiate on your behalf. Remember using a good experienced agent or broker could save you thousands of dollars when it comes to buying or selling a home.
Looking to buy or sell a home in The Greater LA, Orange County or Fullerton, CA area?
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