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How Is Real Estate Commission Paid?




Buying or selling a home on your own is challenging; which is why you need the help of an expert to guide you along the way. While they do a range of tasks—from home appraisals to taking you on home tours and negotiating prices with the other party—real estate agents aren’t paid by the hour. Instead, they’re paid a commission on the deals they close.


How is the amount decided?

The amount of commission a real estate agent receives varies based on the broker they work for and the specific deal. Generally, it’s set at 5 to 6 percent of the cost of the property. Since the seller must adjust this in the price of the home, it’s decided when the contract is signed.


Owing to the fact that there are two real estate agents involved—one for the buyer and one for the seller—the commission must be split between the two. A negotiation determines the percentage of commission they’ll receive when the deal is finalized.


Who pays the commission?

There’s some confusion about who pays the commission to the real estate agent. Since it’s a percentage of the price of the home, it would seem that the buyer pays the cost when they pay for the house.


However, since the cost of the house when the deal closes includes the commission, the seller technically pays the commission. The amount the seller receives after the payment has been made is less than the price paid by the buyer, since the commission has been deducted from it. So, you could argue that both the buyer and the seller foot the bill for the real estate agent’s commission.



How do agents receive their commission?

Real estate agents don’t usually work independently; they’re hired by a broker who they work under or run the brokerage themselves. In either situation, an agency or broker is involved. The commission that is paid on the closing of a deal is paid to the broker. Real estate agents aren’t allowed to receive the commission directly from the purchaser.


The broker is responsible for splitting the commission between the involved agents. A single commission tends to be divided between the parties involved: the seller’s broker, the seller’s agent, the buyer’s broker, and the buyer’s agent.


The process of receiving your real estate commission after the sale has been executed can be frustrating, though. As a real estate agent, you may end up waiting for weeks—or even months—before the amount is transferred into your bank account. With Silver Advance’s real estate commission advance, you can forego this waiting time.


Sell your future commission for immediate funds in your account so you can look after your personal and professional needs. Check our rates and get in touch with us to take advantage of our honest, expert services.

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