Real Estate Sing-A-Long: She Works Hard For The Money
"She works hard for her money...so hard for it honey. She works hard for her money so you better treat her right."
Are you dancing yet?
I am a huge fan of Donna Summer - her music is powerful, fun, and extremely catchy. It's hard not to move your head to the beat and sing into your imaginary microphone. (grab your pen - sing lound - I won't judge)
I wanted to take a few moments to answer a few questions you may have regarding commissions and commission splits. While reading you can continue the dance party you now have playing in your mind.
What is commission? Commission is defined as a fee for services rendered based on a percentage of an amount received or collected or agreed to be paid. Commission is paid only at the time the house closes - sometimes that can take 30 days while for other properties it could be more depending on how long it is on the market.
Who pays the commission? In most real estate transactions, the seller sets a commission for the sale of the home. In many deals, the commission paid out is 6% although it can be more and/or less depending on the terms the agent and the seller have agreed upon. It is all laid out in the listing agreement between the seller and the agent. It is not something that a buyer controls.
Does the agent keep all the commission? I wish - LOL!!! In most cases, the 6% is split between the listing agency and the buyers agency...both sides getting 3%. Notice that I said agency; not agent. The agent and the agency have an agreement in place as to how that split will be divided and that differs for all companies.
What does an agent do with their commission? Well, in some regards our checks go to the same things that yours do. I pay for my mortgage, utilities, groceries, car payment, clothes, and shoes for the girls. The difference between my check and yours is that a portion of the check also goes to Realtor Dues, Training, Self-Employment Taxes, Taxes, Continuing Education, Marketing Materials, Office Equipment, Etc. You have to remember that an agent is basically an independent business and in order to run a successful business I have to be on top of my game.
Speaking of work - I need to get back to working hard for the money.