How do Realtors get paid?

I have found many buyers (buying their first home) might not know how Realtos get paid in a real estate transaction.  I have even had a few sellers question the way the sale commission is determined.  Does anyone have comments or questions regarding this?
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013 - Billings
We think we've answered this question for you!
 
 

Replies (8)

I have many buyers wonder about this as well.  Some buyers think they have to pay us directly.  It varies from state to state but here in California the vast majority of transactions are paid out of the sellers proceeds during the sale.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
Sellers pay here too.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
The commission comes from the seller's side, however many brokerages do charge a flat fee commission to both sides that does not go to the agent.  I tend to pay that flat fee out of my own pocket, rather than passing it along to my buyers (or sellers).  It's a small price to pay for excellent service and loyalty
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
Profile picture for user0656247
Paid by the seller.

We were slightly underwater when selling our house so made a deal with our seller agent. If he agreed to waive his commission on the sale (3%) so we only had to pay the buyer agent commission (3%) then we would use him as our buyer agent on our new house once we sold.  Worked out well for everybody, we were able to save a little money on our sale and he got his buyer commission when we bought our new house. Actually we our building new so he got his 3% commission from the builder and the builder was running also a 2K bonus for realtors so he ended up with his 3% plus 2K extra.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
In Ohio, Realtors get paid usually within 2 days after the home transfers. The seller pays the commission which then gets divided 4 ways. Some brokers may charge a brokerage fee that is included in your closing costs. If seller pays closing costs then you shouldn't have to worry about paying a dime :)
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
Commissions can be paid by the seller or buyer - depends on the contracts between the buyer, seller and their brokers.
Some buyers prefer to pay their broker based not only on a percentage of the sale price, but also with incentives that are laid out in a separate agreement. Here is an example - let's say you're a buyer and you want to bid on a home in a neighborhood where there aren't a lot of multiple offers.  As your broker I'm confident that I can get you the property at a price that is lower than what the seller is asking.  For this situation, I'd take a lower base commission and enter into a separate agreement with the buyer that allows me to earn a larger commission if I can negotiate a significant price reduction, but a lower commission if I fail to do so. The buyer wins both ways - they will get either a lower purchase price or pay a lower commission.
Another common scenario when the buyer pays their broker's commission is when the price of the home is very high.  Normally the seller will determine their asking price based upon the market value of the property, with consideration for all their selling expenses, which includes commissions paid to both brokers.  Let's say the home is worth $1M and both brokers receive a 3% commission, which means they split $60,000. That $60,000 artificially increases the price. If the buyer can pay the commission separately, at least his own broker's commission, he can reduce the purchase price by that amount - thus LOWERING the value that his property taxes are based on.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
What a lot of buyers and sellers do not realize is that our share of the commission on the sale is all we get paid. Not only do we have to cover all of our office and marketing expenses but we don't get a base salary either.

It is not surprising that people think we earn a fortune when they see that the commission on  a sale is 5-6% of sale price, but after that has been split 50/50 between selling brokerage and listing brokerage, each agent only gets what is left after the brokerage takes their share.

Most of us just about make a decent income but we put in a lot of hours for it.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 07 2013
Here in California the seller always pays the commission unless stated in the contract, but that hardly ever happens.
  Flag content
Close
Report a Problem

Please enter a valid email address.

Close
Content flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.
April 08 2013
 
  • Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.
Related Discussions
How do Realtors get paid?
Profile picture for Reginald Welch
Latest reply by Reginald Welch
April 08 2013 | 8 answers
Mortgage Rates
 
Be A Good Neighbor

Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.

Homes for Sale
  1. 213/215 Orchard Ln, Billings, MT Home For Sale
    213/215 Orchard Ln, Billings, MT 59101

     For Sale: $495,000

    • Beds: --
    • Sqft: --
    • Baths: --
    • Lot: 29620
  2. 1425 Saint Johns Ave, Billings, MT Home For Sale
    1425 Saint Johns Ave, Billings, MT 59102

     For Sale: $165,000

    • Beds: 4
    • Sqft: 1952
    • Baths: 2.0
    • Lot: 6098
  3. 3531 Howard Ave, Billings, MT Home For Sale
    3531 Howard Ave, Billings, MT 59102

     For Sale: $99,000

    • Beds: 2
    • Sqft: 1328
    • Baths: 1.0
    • Lot: 9583