“Compensating Your Real Estate Agent”


If you’re buying or selling a home, chances are you’ll have to work with real estate agents. These professionals handle all the tedious details of a transaction, from finding properties to negotiating prices and contracts. They typically take a commission fee for their services. But how do you pay them? The answer isn’t as simple as “the seller pays.”

Most real estate agents don’t get paid a regular salary, instead earning commissions on sales. These fees are paid at closing and typically split between the buyer’s agent, listing agent, and broker. The amount of commission earned varies by state, but the average in Tennessee is 6%, according to real estate software company Clever. The seller’s agent may also pay a desk fee to their broker to cover expenses such as marketing, licensing, and office costs. For more info https://www.naples-group.com/we-buy-houses-northampton-ma/

The buyer’s agent is typically paid from the money the buyer has in hand, but buyers can often negotiate with their agents to reduce the amount of their fee. In some cases, the agent will credit the buyer some of their commission at closing, allowing them to save some of the money they’ll need to come up with for a down payment and closing costs. However, if you’re working with a top-producing agent, be ready to pony up their full commission in order to enjoy their expertise and perks.

In addition to commissions, real estate agents can earn referral fees for referring clients to other professionals for services such as mortgage lending, property management, and relocation assistance. These referral fees are usually negotiated between the agents involved and may be tied to an exclusivity agreement.

How do you calculate the total real estate commission rate on a property? Start by determining the real estate agent commission rate (usually expressed as a percentage, such as 6%) and multiplying it by your target list or final selling price. Then, subtract other costs from the selling price to arrive at the net sale proceeds. For example, if your home sells for $250,000, the total sales commission would be $12,000.

Keep in mind that you might not be able to negotiate the amount of real estate commission rates with a conventional agent if they have many other deals in the pipeline or are already working with a high number of sellers. However, if you’re working directly with an agent who’s part of a low-commission real estate company such as Clever Real Estate, you might have more luck lowering their rates.



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