How Do Real Estate Agents Get Paid?
Real estate commissions, are paid by the sellers or the buyers in a completed real estate transaction and are usually divided between the Seller’s and Buyer’s Broker. Then the actual Real Estate Agent commission is based on the agreement between them and their Managing Broker. See: How Much Does a Real Estate Agent Make
Real Estate Agent Commission
Typically, the buyer does not pay the real estate agent commission, the seller does. However, sellers will often factor in the amount of money they’ll pay to commission when they calculate their asking price and keep it in mind during negotiations. The seller usually decides a commission rate when the property is listed, and that commission is typically evenly split between the listing and buyer agents.
The total commission rate is typically between 5 and 7 percent. In a brokerage where agents make a salary, the total commission is lower, most often 4.5 percent of the sale price. (https://realestate.usnews.com/real-estate/articles/how-does-your-real-estate-agent-get-paid)
Unusual Selling Situations
Other forms of payment for real estate agents include a flat fee for either full service or individual tasks completed. These can include, but are not limited to, helping prepare the home for market to writing up an offer for the buyer.
Representing the Seller
The most common type of listing agreement between the seller and the real estate is one that gives the agent exclusive right market the home. Once the transaction closes, the seller pays a commission.
Representing the Buyer
In Indiana, a real estate agent representing the Buyer is called a Selling Broker. They get paid with the amount from the seller.
Broker’s usually divide the commissions equally; however, not always. Sometimes it is customary in parts of the country to offer more of the commission to the listing agent to cover additional advertising fees. It can also be driven by market conditions. For instance, in a buyer's market, the sellers could offer a larger percentage to the agent representing the buyer.
Real Estate Commissions Are Paid to the Managing Broker
So, the transaction has closed and the amount has been split. Now what? Real Estate Agents, called Real Estate Brokers in Indiana, work for a Managing Broker. All fees in a transaction are paid directly to the Managing Broker and then go to the Real Estate Agent. The amount or percentage can vary.
How Are Real Estate Agents Compensated by the Managing Broker?
How much a real estate agent makes depends on the commission division between the Agent and the Managing Broker. This can be a percentage and might have additional fees such as advertising or office rental. Other brokerages might have a 100 percent policy, but then require flat fees per transaction. These are all part of the decision process when choosing a broker.
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