What is a real estate commission?
A real estate commission is fee that a real estate agent charges for their professional services in the home selling or home buying process, such as listing the property, marketing it, conducting viewings, negotiating on behalf of the seller, and providing guidance throughout the selling process. Itās typically calculated as a percentage of final selling price, and is split between the buyerās agent, the sellerās agent, and their brokerages.
Notably, the commission is only paid upon the successful sale of the property, which means both the sellerās agent and buyerās agent are motivated to close the sale.
How is a real estate commission split?
As a real estate agent, you donāt keep the full commission from the sale. First, the sellerās and the buyerās agents split the total commission into two parts. Then, for most real estate agents, the brokerage takes a cut. This amount can vary from 20% to 60% of the real estate commission, a percentage that is usually negotiated. In most cases, however, itās a 50% split. As an example, a 6% would be split into four equal cuts (1.5% each), which go to each real estate agent and each brokerage.
How can you negotiate a better commission rate?
Research. Researching your market helps you learn how to maximize your benefit. Always read verified sources such as government websites or reputable websites and articles.
Ask around. By reaching out to more than one agent, youāll understand how different agents serve their clients, which can factor into how high their commission is. This can help you know what services you should offer to get a better commission rate.
Be clear. If a potential client doesnāt know everything you offer, they might automatically pick the agent with the lowest commission rate. Itās not always easy to talk yourself up, but you do want to make sure clients know everything you bring to the table.
Real estate commission facts:
- In Florida, the real estate commission is usually 5%ā7% of the sale price.
- The seller pays the total real estate commission out of the saleās proceeds.
- The total commission is split between the buyerās agent, the sellerās agents, and their brokerages.
- The agentās brokerage fees come out of their commission and can be as high as 40% of the agentās commission.