How Do Realtors Get Paid?

If you are planning to purchase or sell a home, you’re probably going to enlist the help of a real estate agent during the process. Many people don’t fully understand how real estate agents get paid and we’d like to try and clear that up for you. Real estate agents work off 100% commission so they only get paid when they help sell or buy a home.

Typically there are two agents involved in a transaction; one for the buyer and one for the seller. Both agents will be paid a percentage of the total commission from the sale by the broker for whom they work. For us, it’s FC Tucker.  We work with FC Tucker to set up an agreement to split commission for each sale or purchase we facilitate.

At closing, money is distributed from the seller’s proceeds to pay both brokerage companies. After the money is distributed to the brokers, a percentage of it is paid to agents who facilitated the transaction.

Here’s a real world example to help clear it up:

A homeowner asks Ferris Property Group to sell their house for $100,000. FPG is a group of rockstars that work with FC Tucker. There is a 7% commission agreement on the sale of this home. Jim-bob from Rowdy Real Estate brings his client to see the home and they agree to purchase it for the asking price of $100,000.

So the total commission on the sale of this home will be $7,000 ($3,500 for each broker), taken out of the sales price at closing. The amount each realtor brings home depends on the brokerage agreement for each agent. For example, since Jim-bob isn’t much to brag about, he may only make 20% or $700 of Rowdy Real Estate’s $3,500 commission.

Hopefully this example helped to clear up how real estate agents get paid. We’d love the opportunity to help you in the home buying or selling process. If you ever have any questions please don’t hesitate to ask!