Are you familiar with how Agents get paid?

[Nick Rutkowski]

I’m going to explain to everyone the payment structure of a Real Estate Agent. I sense there is a disconnection between investors and agents because both parties do not understand each other as well as they should. Investors want the most amount of money while an agent wants the most amount of money from their commission. Basically we all want more money! It’s what keeps us going as agents, investors, and the laymen.

Have you said one of the following statements? “My agent is charging me too much in commissions”or “Do I have to pay the standard commission?” My favorite, “Can you cut your commission?” If you said one of those statements, you’re not alone. In matter a fact, I became an agent to cut the commissions too.

Here is the tricky part: there is a lot of money going to an agent but they DON’T GET ALL OF IT! They get a tiny piece of that big commission they are charging you!

The breakdown:

(Disclosure) Under law, I cannot share what my broker-agent split is with other agents. Because there are real estate agents on BP, I have to use different numbers. For this example I’m going to use a 50/50 broker-agent split.

You’re selling your house for 100k

7% commission

Two agents: Buyer and Listing Agent

50/50 Broker-Agent Splits

Here we go:

100,000 * .07 = $7,000

7,000/2 = 3,500 (Buyer Agent gets 3.5 and Listing Agent gets 3.5)

3,500/2 =1,750 (Broker-Agent 50/50 split)

Already an agent has been cut down to 1.75% commission.

1,750/6 = 291.66/month (typical house takes 3-6 months to close)

An agent will make under 300 dollars a month selling a 100k house for 6 months. I didn’t include expenses because it varies per agent. This is on a 7% commission, most agents could work for 6% but a 1% deduction can be significant to an agent.

We all want to cut costs and make more money. I just hope this enlightens some of us and brings a better understanding of Real Estate Agents. This is why we do what we do and charge a commission.