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COMMISSIONS - Real Estate commissions and how they are distributed are revealed and explained:

Here, I need to be extremely frank. Do you see commission as an “unnecessary expense”? We are all bombarded by ads for a myriad of commission cutting brokerages, with some claiming full service while charging only a small fee.

Here’s a guide to how commissions are generally distributed:

  • If the commission percentage is 6%, and the home sells for $400,000 - then the total commission paid is $24,000.
  • 3% (half of the 6%, or $12,000) goes to the selling agency (agent who brought buyer). It is typical for that broker agency to take half. Therefore, the selling agent receives $6,000.
  • The other half ($12,000) goes to the listing agent’s broker. They again could pay the listing agent half, or $6,000.

Before your listing agent receives the $6,000 from your $24,000, he/she must pay all marketing expenses associated with listing your home - up front. This is an expense that comes directly out of their personal pocket (agents are not employees of the agency, but are self-employed independent contractors). Advertising, signs, photographer, artist, printing, flyers etc., are therefore all paid out of the listing agent's pocket upfront.

Then, let’s not forget license renewals, mandatory annual continuing-education and training and association memberships, plus additional broker agency fees (for office space, printing, bookeeping, etc.) totaling about $3,000 per year. And we haven’t even spoken about your agent’s expertise, time and talent.

What that gives you, the seller, is a professional with a fiduciary responsibility to represent YOU. Our on-going education, comprehensive knowledge of the marketplace, marketing expertise and professional affiliations are the tools we as agents need to sell your house flawlessly.

Actually, the Realtor who lists your home most probably will NOT be the one who actually sells it. It is the listing agent who is responsible for appropriate exposure in the marketplace, and to represent your best interests based on their knowledge and expertise. Don’t let yourself be taken advantage of by not being represented adequately.

Lastly, the purchase and sale of your home is extremely complex and can be overwhelming. If you hire a cut rate agency ~ you get what you pay for. Often-times, a cut-rate listing agency will not pay out market rate commission to selling agencies - thus reducing the incentive for a regular broker to spend their time and energy on that particular home. For some, using a cut rate agency is just fine. There is room in the market for both kinds of services, just as there is room for both Nordstrom and Walmart.

I’ll be delighted to explain more completely at your request. I’m all about full disclosure in every aspect.

You can “Live in the View!”