Where Does the Commission Go?

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How does commission work in real estate? It seems like it would be rather simple, but it is actually a bit more complex than you would think.

There are four parties involved in real estate commission: the listing agent, listing broker, buyer agent, and the buyer broker.

To explain, I will use the customary 6% commission rate. In a 6% arrangement, 3% will usually go to the listing side and 3% will go the buyer side. Each respective side will be split in some fashion between the broker and the agent.

 

In a 6% commission arrangement, 3% will usually go to the listing side and 3% will go the buyer side.

While your listing agent might sit down with you and sign an agreement to sell the property for 6% commission, recognize that they’re usually splitting it 50/50 with the buyer side and then again with their respective broker.

On the listing side, if someone from my team is working with you when we list your property for sale, here’s how it would break down: For our 3% cut, 1% goes to the broker, 1% goes to the marketing cost (our overhead, admin support, and other things that go along with selling your property for top dollar), and 1% goes to pay the agent. We have costs of sale, costs of doing business (being licensed), and then we have what we net.

If you have any questions whatsoever or if there is anything I can help you with, please reach out to us. We would love to be of service to you.

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