“You don’t pay us anything directly.” It’s a sweet sentence to fall on your ears as a home buyer, isn’t it? It’s nice when your house hunting adventure doesn’t give you one more thing you’re financially responsible for on top of the earnest money, inspection fees, closing costs and all other costs adding up! That may lead you to wonder, though, how realtors actually get paid. If that question has crossed your mind, look no further, we have the answers.
What Is A Commission, Anyway?
Unlike most services received by professionals, real estate agents are paid after the sales transaction is closed. What that means is your agent isn’t paid at an hourly rate; which, if you’ve ever been a part of the house market before, you know how fortunate that little fact makes you!
Realtors are actually paid by a commission or percentage of the overall sale of the property. These commissions are held by real estate brokerage firms who essentially run the process of buying and selling a home.
Most commissions are 3-5% of a property’s sale, which are generally produced through the seller’s costs for listing, marketing, and the overall sale of the home. The cost of commission varies, and the fact that the percentage varies is ultimately done in your best interest as the client to guarantee at a federal level that you are not being taken advantage of.
So, for example, the average cost of a home in Kosciusko county is $167,000. If the agreed-upon commission is at 5%, that means the real estate broker and agents get $8,350 at the end of the sale. But that doesn’t mean your real estate agent is making that much money right off the top.
How Is A Commission Split?
Despite the large sum of money which goes into a commission, keep in mind that that money must pay the broker and the real estate agent. Well-known splits are 50/50 between the agent and the broker, however, that agreement varies between brokers and agents. The decision is often based on the agent’s expertise and the the property’s value.
Successful agents may collect 100% of the commission cost, however, even then, the agent has to pay the brokerage agency a desk fee. It’s also common for referral agents to get a cut of the commission as well, but that fee is taken off the top before the final split occurs.
What This Means For You
Now that you know a little more about how a realtor is paid, here’s where it impacts you. You can rest assured that trustworthy agents such as Kim Clark in Kosciusko County will work her hardest for your best interest in getting the home you always wanted. Your happiness is her happiness and end goal. Call her today!