How much of the commission does the real estate company give the individual agent who sells a house? Is there an industry standard or does it vary? Does it matter if they are a sellers agent or a buyers agent?
I just sold my house and was curious how much the agent made.
It is completely variable. First off, the real estate agent is not paid by you. The seller pays a commission to the Broker, who is the only person legally allowed to take money for the sale of your house. So if you paid the broker 6%, that total is split between the selling broker and the buyer’s broker. Assuming your agent did not bring the buyer, 3%, or half of the negotiated sales commission went to your broker. The agent is compensated by the broker based on whatever agreement they have. It could range anywhere from a 60/40 split to nearly 100% going to the agent, after fees are deducted. Understand, too, that the real estate agent has paid for all the marketing of your house out of pocket. Any advertising, open houses, etc were paid for by the agent, not the broker.
So, theoretically, if your house sold for 100K, $6000 was split between the brokers. Of the $3000 that went to your agent’s broker, fees for everything from asdvertising to multiple listing service dues to pager fees were deducted and then, according to the arranged split, the agent was paid the remainder. It could have been $1700 or it could have been almost $3000. It depends.
Believe me, for the amount of work and time it takes to close a successful real estate transaction, your agent didn’t make much.
In addition please understand that most real estate agents are usually employed as pure commission independent contractors which means that they are only paid from a percentage of the sales commission, and there is no base salary or other perks other than office space and a telephone, and most other expenses are (in one way or another) borne directly by the agent. Health insurance, vehicle expenses, etc. etc. are all paid directly by the agent regardless of how long they have worked for the brokerage. The agency will usually share newspaper advertising costs with the agent based on a bonus or split system of various types.
100% commission agents versus “split” agents pay an office fee of around 1,000 to 2,500+ per month for the services the office provides. In essence they “rent” their desk space and pay directly for the office services. This sounds attractive unless you have a few slow months and start to see your business credit card balance due creep well into the 5 digit region.
It can be a good way to make a living if you can be organized and focused on task and an excellent way to lose a lot of time and money if you are not. You start every year with $ 0. and what you make is entirely up to you and your sales production regardless of health problems, family crises, personal motivation issues or whatever else life throws your way. There are easier ways to make living, but for those who like risk and are confident in their ability to manage time and work with people it can be an excellent professional career.
Astro - Commercial-Industrial real estate agent and a CCIM