How to Pay the Real Estate Agent

Real estate agents work on commission — a percentage of the property’s sales

price. It’s usually the seller who pays the commission, but buyers can negotiate a

lower commission rate.


Most real estate agents are accustomed to seeing their paychecks in the form of a

commission check. This check typically totals a percentage of the final home sale

price, and it’s the amount that the real estate agent’s broker will share with the

buyer’s agent and any other brokers involved in the transaction. Often, the

commission percentage is negotiated upfront and will be detailed in an agent’s

initial contract with a seller.


A check for a $500,000 home sale will yield a commission payment of about $25,000

to the selling agent’s brokerage firm. However, this is rarely an agent’s only payday.

Most agents, even those who are affiliated with large brokerage firms like Redfin and

Realty ONE Group, have to split this payment with one or more other parties.

In addition, a good portion of the buy-side commission is typically paid to a referring

agent. This can be an agent who works for a different broker, but is familiar with a

client’s market. This type of arrangement can also help an agent expand their

network and generate more leads, which can make it worth their while to offer a

referral fee.Must visit


There are other ways that homeowners and buyers can save on real estate agent

fees. For example, some agents will offer a cash back rebate once the property is

purchased. This is an attractive option for potential homebuyers because it can

effectively lower the purchase price of a home by a percentage that would otherwise

go to the real estate agent.


It’s important for potential buyers and sellers to understand how real estate agents

are paid before deciding to hire an agent or sign a listing agreement. Unlike other

jobs, where employees are guaranteed to receive a weekly paycheck, real estate

agents are largely self-employed and must manage their own income streams. This

can be difficult for new agents who aren’t familiar with the ins and outs of a real

estate career, and it can lead to financial uncertainty. It’s essential for both agents

and clients to have a clear understanding of how real estate agent fees are

calculated, so everyone can work towards an equitable arrangement.