Commission: Everybody Wants a Piece
When you go to sell your house and see an agent’s expectation for a 6% commission, it might strike you as ridiculous. On a $300,000 house, 6% is $18,000 dollars! “This agent is ripping me off and getting rich!” you might fume. But that’s not the case, and the infographic below does an excellent job of breaking down just how much money each agent actually makes from a single house sale.
[perfectpullquote align=”full” cite=”” link=”” color=”#dd1f1f” class=”” size=””]Spoiler: it’s not as much as you think. [/perfectpullquote]
A typical agent could expect $4,500-6,300 dollars of the $18,000 from our example, before expenses and income taxes. And the self-employed tax is brutal, by the way.
It’s also worth noting that agents don’t get paid for their time in the office. Because they are self-employed, there is no salary or hourly wage.
So Who Pays What?
When it comes to paying commission, there is a ‘norm,’ but no statutory standard. Sellers typically pay the 6% commission fees that are normal in our area, making the buyer’s agent ‘free’ to the buyer in the sense that they don’t pay their agent directly.
However, contracts and negotiations can change who pays various fees if both parties so choose. For example, for a buyer to pay their agent’s fee, they would need to sign an additional form in their buyer’s representation agreement stating their intent to pay the agent’s commission. And while buyer’s agents could theoretically incorporate ‘flat fees’ of some sort into their buyer’s representative agreement, this is extremely uncommon, if not unheard of.
For more information or a deeper explanation of commission’s ins and outs, feel free to give us a call at 903-734-2235, or send us an email at email@example.com.
Infographic by Point2.