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There is a misconception in the marketplace that Realtors keep 100% of their commission, but that’s just not how it works. Throughout the United States, Realtors are mostly independent contractors. This means that they are self-employed small business people.
Throughout the country, commissions are all negotiable. They are set by the buyer and the seller, and they range anywhere from 1% to 10%. Realtors pay all their own expenses: their cards, marketing costs, promotional costs, professional photography, website supplies, cell phones, retirement plans, insurance plans, and many other things that are usually provided by places of employment.
It’s so expensive to be a Realtor that more than 80% of new Realtors go out of business within two years. When an agent acts as a representative for the seller, they receive 100% of the commission, but at closing they give the other agency half of that commission. So, the buyer’s agent and the seller’s agent split the commission, and the commission that each of them takes away is split once more with the agency they work for. In other words, agents almost never keep 100% of the commission, and that’s before considering taxes!
I hope this helps you understand how commission works. If you have any questions about this topic, please don’t hesitate to reach out to us. We would love to hear from you!
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