One of the first things you will hear when you pursue a business in real estate is “Do you have enough money to get by for a couple of months?” That’s right, real estate agents hardly ever work for hourly or salary pay, they work solely on commission. While it’s well-known that it can take anywhere from three to six months to get your first sale as an agent, it’s very easy for sales to fall through, for clients to change their minds and for real estate agents to put a ton of work into selling a home that just won’t sell.

Many sellers are quick to think that a six percent commission is too high. They think that those thousands of dollars can easily be saved by selling it themselves. For experienced sellers who are realistic about their home’s price and who plan on marketing the property enough, they may be right. Unfortunately, many new homebuyers feel much more comfortable having a buyer’s agent walk them through the process, which leads to problems for the “For Sale by Owner” sellers. This is why you should offer a buyer’s agent their half of the commission for bringing a qualified buyer. This will help open your market, and motivate an agent to bring you buyers.

If you’re considering using an agent, however, you’re just curious where all that commission goes, then here’s the breakdown:

On a six percent commission, the listing agent will automatically split that in half with the buyer’s agent. Now your agent is down to three percent and this is where their broker comes in to take their cut. Every agent needs to hang their license with a real estate broker. A broker will help teach them and guide them, will sometimes help them advertise, and will almost always take a percent of their commission. Some brokers will take a flat fee and others will charge a hefty “desk fee.” While it may seem like you’re funding the whole operation as a home seller, a broker helps your agent network, advertise and keep up to date on everything real estate.

If six percent still seems like a lot, keep in mind that many agents spend money on lockboxes, staging materials, and advertising for your property, not to mention the time involved. Some agents would even be willing to work for a reduced commission on a large sale, but that varies by agent.

When it comes down to it, after all the splits, desk fees and advertising costs, your agent isn’t making the killing you might have thought they were. If you have any kinds of questions about commissions, make sure to ask your agent at their listing presentation.

For more information on Aurora real estate, or to contact an experienced real estate agent, please visit us at PorchLight Realty.

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