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Confused about how commissions work?

I asked my realtor for a 4% total commission for the sale of my old house and purchase of my new house. They agreed to the 4%, but how is this broken down between the sale of our home and the purchase of our new home?
  • August 25 2014 - US
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Answers (7)

4% is your cost of a commission when you SELL it, not just when you list it... if it does not sell you do not pay a commission. 

For a typical 6% commission, it is split 3% to the listing agent and 3% to the buyers agent, typically, but not always. 

If your Realtor is not making it clear to you, get a new Realtor. 

 
  • August 25 2014
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I will clarify with him, but want to go into the discussion with some knowledge. With the assumption that he will take 1.5% and pay say 2.5%? Basically when I negotiate 4% I am only speaking 4% for the sale of my house correct? And if the seller of the other house is paying 6%, my realtor would be making approximately 4.5% total commission? 
  • August 25 2014
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The Realtor will be paid commission by the seller for the purchase of the new house. The 4% is the commission for selling the "old house".
  • August 25 2014
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Profile picture for Hannah Tai Homes
I think you need to clarify this with your realtor. My guess is that this realtor is negotiating 4% for the sale of your house rather than the usual 5-6% total commission split between listing and selling agents. So he's probably going to make 1.5-2% instead of 2.5-3%.

He probably was willing to cut that commission because it sounds like you are using him for the purchase of your new home.

You may have found the house, but there is a whole escrow period which he will guide you through, so he will be doing plenty of work for you.

I am speculating as I don't know the specifics of what he proposed, so again, make sure you ask him to clarify.
  • August 25 2014
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He would be selling my home and representing me in the purchase of my new home. I actually found my new home by going to an open house so they really didn't do anything for the new home search. I haven't signed anything with him yet. I am looking for how to better understand how to this works. Meaning would they take 1% for my sale and 3% for my purchase totaling 4%?
  • August 25 2014
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Profile picture for wetdawgs
As you negotiated this with your agent and none of us were involved, is it not possible that your agent is the one to answer this question?   Did you sign a contract where it is in writing?

  • August 25 2014
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Profile picture for Hannah Tai Homes
I am unsure why you decided to do this since buyers normally don't pay their realtor a commission. Unless you mean that you are paying 4% for the sale of your home, which your agent will share with the realtor bringing in the buyer. Can you give us a little more information?
  • August 25 2014
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