money
How do real estate agents get paid? That is a great question and it is asked all the time. We don’t always get paid. In general the only time we get paid is after we sell a house and only then after a successful closing. Generally we get paid out of a commission from the home seller.
Either we list the house and the seller pays a commission upon the successful sale or we represent a buyer and the sellers agent shares the sellers commission with us. If a home is listed in the MLS a payout to a buyers agent is specified and through broker reciprocity any agent can sell any home that is listed.
When I represent the seller if the buyers don’t have an agent I can keep the entire commission if they do have an agent I share the commission.
We don’t get paid for holding open houses or for showing houses to buyers or for having appointments with buyers or sellers. Most agents pay for all of their marketing expenses and we own those fancy blue electronic lock boxes. We generally rent the signs and even the brochure boxes on top. We pay a company to put signs in the ground, remove them, and store them.
When you work with a real estate agent they will want you to sign some sort of a contract that says if you sell their house or if you represent them as a buyer you can collect a commission.
Working on a 100% commission basis takes courage energy and at times nerves of steel. There are no guarantees just opportunities. There is no health insurance and there are no paid vacations but there are no layoffs either and if one client fires us we can stay in business by working with another but if no one hires us we can not collect unemployement. Independent contractors are ineligible.
There are a lot of nice people out there but there are also assorted jerks and real estate agents that poach other peoples clients by telling them what they want to hear instead of the way that it is.
Real estate agents quit like crazy when the housing market crashed. One of the most common reasons for quitting is not being able to make enough money to pay the bills. Our pay is based on the price of the home and while home values fell our expenses stayed the same or rose.
Those of us who survived are older and wiser yet agents that just got their licenses last week get paid the same as the rest of us. It is up to the people who work with us to decide if they want a new agent or one with experience.
The part about these older wiser real estate agents getting paid the same as those who got theirs last week is not always true. Commission splits with the broker vary by individual, and usually more experienced agents get the better split (as it should be), if there is even a split at all.
Those that survived the crash can be older and wiser… Or they can be a complacent agent who is not innovative. That is also an individual thing. In all fairness, that judgement was not made in the article; just pointing that out.
Enjoyed your work.
Very true there are complacent agents out there and some are not very innovative but some of those agents sell a lot of real estate.
i have been a Realtor since 1997 in the Phoenix area so I have seen just about every market there is. Thanks for the insightful post. PS: i grew up in the twin cities so i especialy like your site
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Hello Teresa Boardman, you are again right about the payment of real estate agents. This is true.