Real Talk: Real Estate Agent Commissions
Ever wondered how much a real estate agent truly makes? When thinking of selling or buying a home, do the real estate commission fees have you wondering where the money goes? We wanted to take the time to list out a few things regarding our commission because unless you are in this industry, it can seem like a lot of extra fees to some. Like with most things, you get what you pay for so we hope to shed light on how important it truly is to have an agent by your side during your home sale and/or home purchase.
A real estate agent can easily spend hundreds to thousands in fees as part of their business overhead. These are fees just to stay compliant as an agent and REALTOR® with our local, state and national associations. In addition to that, if there is a resource we use, we pay for it. If we need training, we pay for it.
As some of you have seen – during our awesome FREE listing consultation that we offer – to sell your home the total commission is typically split between both the buyer’s agent and the listing agent. Nothing is ever paid up front so nothing is paid if it does not close and there is absolutely no risk to the seller. Only to the listing agent who is spending money to stage and market your home. Once that commission is split between the two agents, here is a quick breakdown of where the money continues to be split and where funds go from there.
- Split with the Broker
- Our of the agent’s portion deduct:
- Property Advertising (Photos, Staging, Signage, Brochures, etc..)
- Internet Sites and Advertising
- Other Marketing Options (Open Houses, E-Flayer Blasts, Agent Open, etc..)
- Agent Business Overhead (Licensing, Training, Associations, MLS, Broker Fees)
- Self-Employment Taxes (15.3%)
As you can see, the agent does not get to put all that commission into their bank accounts for their income. The same is on the buyers agent side, they, too, split their commission with their broker and have expenses, including taxes, that come out of their portion of the commission.
Pat Vredevoogd-Combs, past president of the National Association of REALTORS in 2007, testified before the House Financial Services Committee on Housing to blunt government complaints about industry pricing. As part of her testimony, she submitted a list of 184 things that listing agents do in every real estate transaction. You can see this list here. 184 sounds like a lot of things to do for one single transaction, right? Many agents enlist the help of a transaction coordinators or assistants, which is an additional cost, to help keep up with paperwork and timeline to ensure excellent customer service to their clients.
As a full service real estate team, the Marr Team can provide to you all of these things listed and even more for each and every transaction. Our team works full time to provide you the best service to ensure a smooth transaction from start to finish. Depending on the transaction, some of those 184 items may take minutes, hours, or even days to complete, while some may not be needed. More importantly, they reflect the level of skill, knowledge and attention to detail required in today’s real estate transaction, underscoring the importance of having help and guidance from someone who fully understands the process – a REALTOR®.
Remember- knowledge and experience is not expensive, it is priceless!