What is a Realtors Commission?

In real estate, a commission is a fee that is paid to a real estate agent for their services in facilitating the sale or purchase of a property. Typically, the commission is calculated as a percentage of the total sale price of the property and is paid by the seller at the time of closing.

The commission percentage can vary, but is typically around 5-10% (there is not standard commission on homes and it is always negotiable) of the sale price of the property. The commission is divided between the listing agent, who represents the seller, and the buyer’s agent, who represents the buyer. The exact division of the commission will depend on the agreement between the agents and their brokers.

Real estate commissions serve as the primary source of income for most real estate agents. The commission provides an incentive for agents to work hard to sell a property or find the right property for a buyer. In addition to their commission, agents may also charge other fees, such as administrative fees or marketing expenses.

The commission is typically negotiated between the seller and the listing agent when the property is listed for sale. The commission rate and terms of payment are outlined in the listing agreement, which is a contract between the seller and the listing agent. The commission is usually paid by the seller out of the proceeds of the sale at the time of closing.

While the commission is a significant expense for the seller, it’s important to keep in mind that the commission is often necessary to ensure that the property is marketed effectively and that the sale is handled professionally. A skilled real estate agent can help sellers to navigate the complex process of selling a property, and can help buyers to find the right property and negotiate a fair price.

In summary, a commission is a percentage of the total sale price of a property that is paid to a real estate agent as compensation for their services. The commission serves as the primary source of income for most real estate agents and is negotiated between the seller and the listing agent when the property is listed for sale. While the commission can be a significant expense for the seller, it’s an important investment in ensuring that the sale is handled professionally and effectively.