The Real Estate Commission Demystified
by Rebecca Burns, Broker
There is a high tendency by buyers to think they pay a Realtor for their service. SO NOT TRUE!
A real estate commission is the sales associates fee for service, and we work very hard for this “paycheck”. The commission is a percentage of the sale price negotiated at the time of the listing agreement with the seller. The seller pays this fee (typically at the time of closing), not the buyer!
The listing agent shares a percentage of the commission. There is a buyer’s commission, and there is a seller’s commission. In this example I will use 3% (selling agent) and 3% (buying agent)…that equals 6% total commission to be paid by the seller at closing. When the listing agent sells her own listing, she gets both sides of the commission (6%) from the seller. When a buyers agent is involved, then the listing agent gets 3% and the buyers agent gets 3%, with a total payout by the seller of 6%. Understand? It’s called sharing the commission or cooperating, and it won’t matter either way. A 6% commission will be paid (in this example). Besides, most transactions involve a buyers agent and a sellers agent anyway!
So, it might seem perfectly logical to you, to call every agent, on every yard sign you see, while driving around searching for your next property. However, the best course of action is to interview Realtors® and pick the one you trust and enjoy working with the best, and stick with that one!
Because, what will happen…and I promise you this…you will get barraged by ravenous Realtors (sales associates) that want to sell you a property and make a paycheck! We’re like vultures on a gut wagon people! I promise, you will get duplicate and triplicate information sent by ALL the sales associate you have just contacted since we have access to all the same listings. You will get frustrated and burned out and you will begin to despise the essence of a Realtor®, solely for your lack of understanding of how you just set yourself up for this failure, and created the issue. So please, find ONE realtor (like your horse trainer, your dentist or your doctor)…and be a loyal customer to her or him. Things will stay streamlined and organized.
Also, some realtors work harder than others and provide extra information through their due diligence and knowledge, while others merely open doors and let you walk freely around properties while sitting on the couch smacking their gum and texting. Trust me, I‘ve seen it! They show properties without reports in hand to help validate your decision to either walk away or submit an offer. You want your Realtor to help you purchase or sell your property at the best possible price, so find one that actually works for you!
And please remember, the real estate commission—along with most costs associated with buying and selling a home—is tax deductible.
BTW: What is the difference between a realtor and a Realtor®?
A “Realtor®” is a member of the National Association of Realtors® who abide by a strict Code of Ethics Policy. We are allowed to use the registered trademark ® behind the word as part of the logo (notice we use the trademark on our advertising materials here)!
A “realtor” can merely be any licensed person by the state to sell real estate, in that state. So ask yourself…how bonafide is your “realtor”?
You can check to validate any license in the state of Florida here.