How Broker Commissions Are Earned

Secret Real Estate Wholesaler Academy

Even if they split commission from the sales of your property, you can place a good bet that brokering real estate is what you most need when putting up your home for sale and finding that best buyer in town. Sure, the broker and the agent will get what they worked for, but at the end of the day, it will be a win-win solution to all of you.

The real estate broker gets paid and his agent. And why do you need them? Simple. They make everything easier and simpler for you. You tell them you want to find a buyer for your property and they will do the rest of the works until it is sold to another individual and you get the payment minus the commission for your agent and broker. Even so, you might want to know and understand where all these commissions are going.

Here is what the commission is for:

The commission the broker and agent receive is based on the total amount of property sale. You have to understand that a real estate agent is working under a real estate broker. The agent gets paid by the broker after a real estate commission is earned from closed real estate deal. Once an agent lists a customer’s property and acquires a buyer for it, the customer will provide commission fees to the broker, from which a percentage will proceed to the agent. The client then signs an agreement with their enlisted broker.

A minimum of 30% of the total earned commission from brokering real estate is given to the agent. As an example:

If the total home sale price amounts to US$100,000, the real estate broker splits 10% commission from it, which amounts to US$10,000. If the broker is giving out 50% to the agent, the latter will then receives US$5,000.

However, in other cases, the agents can receive the 100% of the commission and just pay their broker a desk fee. This is typically applicable to top selling real estate agents.

In conclusion, how much commission an agent can earn depends on three things:

  • total home sale price
  • the broker’s sale percentage fee
  • agreed commission fee from broker’s fee between the broker and the agent.

Others receive commissions via sliding percentage scale. Real estate agencies that do this augment the amount of commissions they receive by having more sales. Also, commercial properties tend to have higher commission percentage than residential properties. However, with the laborious negotiations involved when brokering real estate properties, real estate agents do not always aim for a highest commission possible.

To other people, the commissions spent when enlisting a real estate agent or broker may look over the top, but when they see at the general value, it is well worth it. After all, performing a large number of tasks such as listing and arranging the property, arranging for advertising like open house showing and others, getting help from contracts, inspections, negotiations, and the closing deals are going to take a huge chunk of time as well as effort and money.

Added to that is the effort, money, and time spent when acquiring pertinent information about and around the property, like the home, its community, and even the neighborhood. The agent will also have to learn of the values of the surrounding amenities and nearby homes. These things are tedious enough that the seller himself might not be able to sustain without a help gotten from brokering real estate.

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