How Do Realtors Get Paid?
Posted on | May 28, 2009 | 1 Comment Written by: Diane Donnelly
People often don’t know how realtors get paid.
Buyers – you realtor services are free! (certain restrictions could apply). The seller pays the commission!Â
Sellers – you are responsible for the paying the services of the realtor.
Realtors get paid based on the successful negotiation of a contract brought to a successful settlement. Therefore, if an agent works with a buyer or a seller and was unable to secure a buyer for the sellers home or find a home of choice for the buyer, he doesn’t get paid. It is no wonder that approximately 39% of all Anne Arundel County realtors did not renew their license.Â
Realtors ask for the buyer to be loyal. That is, agree to work exclusively with the agent you choose to work with. Working with several realtors at one time means only one will be paid and the others are working for free. Learn up front what the agent is going to do to help you find a home. Interview the agent and be sure you feel comfortable working exclusively with him or her. Some interviewing questions might be:
- How long have you been in the industry?
- How many homes did you sell last year?
- How many homes have you sold this year?
- Do you work as a buyers agent, a listing agent, or both?
- Do you have staff on hand to deal with the administrative duties associated with the sale?
- Are you full time?
- How will you keep me updated on the process of the transaction. How often?
- How many buyers and sellers are you working with right now?
- How knowledgeable are you regarding financing?
- How well do you know the area where we will be purchasing?
What does being loyal mean? If you go into an open house without your agent, let the agent at the house know you are being represented and offer him a business card. If you visit a for sale by owner, let them know you are working with an agent. If you see a sign in a yard and are curious what the price is, call your agent to do the research or if you call the listing agent on the sign directly, inform him right away that you are working with an agent. Failure to disclose that you are represented can cause legal consequences to the agent and potentially you, the buyer.
Sellers! The listing agreement that you signed with your listing agent, will delineate what percentage commission you will pay to sell your home.  Let’s suppose the listing agreement was signed for a 6% commission, the typical split would be 3% to the listing brokerage and 3% to the selling agents brokerage. Depending on the brokerage agreement the realtor has with his brokerage (Keller Williams, ReMax, Long and Foster, etc), the realtor will share a percentage of his earned commission with the brokerage. So, it is critical for the seller to do his due diligence when choosing a listing agent to list his home for sale.
Some interview questions to ask a listing agent might be:
- How many houses do you have listed currently?
- How many houses have you sold YTD?
- How many houses did you sell last year?
- What are your average days on the market?
- What is your list to sale percentage?
- What is your marketing plan to sell my house?
- What do you feel are the strengths and drawbacks of my house? How will you overcome objections?
- How long have you been in real estate?
- Are you full time?
- Do you have staff to support you administratively?
- What commission do you charge?
Hopefully this sums up some of the questions you have regarding how realtors get paid. It’s important to arm yourself whether you are a buyer or a seller, with a professional that represents you well. A professional with experience, tenure, successful negotiation skills and a proven sales history.
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Tags: agent > anne arundel county realtors > buyer > contract > negotiation > realtors > seller > settlement
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One Response to “How Do Realtors Get Paid?”
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May 28th, 2009 @ 12:56 pm
Great post! This should be very helpful for buyers and sellers to better understand what realtors do, how hard they work and the importance of loyalty.