Real estate agents work for agencies or brokers. When a real estate transaction is completed, a fee is added to the total cost of the property to pay all real estate professionals involved.
When both a buyer’s agent and a seller’s agent are involved in a real estate transaction, they will both receive a commission. The commission is payment for the services they provided. In some commission sales, the agent working on behalf of the seller will receive the full commission and then pay the buyer’s agent out of the total amount received.
The normal, or average, commission for the sale of a home is 6 percent. When two real estate agents are involved, this commission is usually split 50-50, with each agent receiving 3 percent of the sale total. Amount received by agents may also be split with the agency or broker they work for.
With the drop in property values in 2011, many commissions were reduced to slightly over 5 percent. Properties that sell for over $1.5 million dollars may have lower commission rates as well.
Commissions can also be negotiable. In cases where the buyer or seller performs some of the agent’s work, the agent may reduce the commission. Agents also reduce commissions occasionally to assist a buyer or seller financially.
Flat rate services and discount brokers receive different rates, which can reduce the cost of buying or selling a home. Some agents will offer the option of purchasing only the services you need instead of paying a commission. Commission amounts should be clearly stated on sales contracts. The terms of any divisions of the commission need to be detailed as well.