How Do Real Estate Agents Get Paid?

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How Real Estate Agents Commission Works

Real Estate Agent Commission Structure

I’ve seen a fair share of doubts about real estate agents in over ten years in real estate. If you know little to nothing about the industry, you might not understand what a real estate agent does and why they get a part of the sale when you buy a home.

You might have thought of these:

  • Do I need to hire a real estate agent to buy a house?

  • Maybe I can save more if I don’t hire a real estate agent.

  • People say real estate agents are after their commission and not to help people, so it’s probably true.

You’ve opened the right blog because I’m here to explain how a real estate agent’s commission works.

Who Is Involved in a Real Estate Sale Transaction?

In a transaction, here are the key players:

  • The seller

  • The seller’s broker

  • An agent that works for the broker and represents the seller

The seller’s agent is in charge of listing and marketing the home for the seller and making sure they get the most money they can get for the home.

On the other hand, there’s…

  • A buyer

  • The buyer’s broker

  • The buyer’s agent who works for the broker and represents the buyer

The buyer’s agent represents the buyer, which encompasses helping them find a home, making a competitive and attractive offer on homes the buyers like negotiating with the sellers, facilitating inspections and making sure the buyers do their due diligence, and assisting with the closing process.

How A Real Estate Sale Transaction Works

When the seller hires a broker, an agent is assigned to them. Or if they hire an agent, they technically hire the broker as well.

When it comes time for closing, the seller pays the broker, which the seller’s agent gets a part of.

The agreement usually indicates that the seller’s broker should pay a certain percentage of the commission to the buyer’s broker, which pays a certain percentage to the agent.

The process may differ in other locations, but this is how it works for real estate sale transactions in Virginia, Washington, DC, and Maryland.

If you’re more of a visual learner, I drew a simple diagram to visualize better how the transaction works.

Watch the video above to see how everyone is connected and who pays who.

Ultimately, if you’re a buyer, you won’t be the one paying your real estate agent. Their commissions come from the sale amount.

If you have an agent as a buyer, you will be better represented during the transaction to negotiate and find all the discrepancies to ensure you’re getting the best home.

If you like these tips and need assistance buying a home in the DMV, I’ve been a licensed real estate agent and broker for over a decade.

I’ve helped hundreds of buyers find the best home, and I can help you find yours. You can reach me at (703) 346-2776 or Dan@greetingsvirginia.com.

Dan Rochon

Dan Rochon is an Associate Broker in VA, Broker in MD; Owner of Rochon Investments, LLC; Owner and Co-founder of www.GreetingsVirginia.com and Owner of other Joint Ventures as well as a real estate principles instructor at Moseley Real Estate Schools.

As a real estate sales agent, Dan and his team are consistently top producers in their marketplace and provide solutions for their clients. Through their investing company, Dan and Traci Rochon have been investing in residential and commercial real estate ventures for more than the past decade.

Dan and his wife Traci are frequent speakers and are often quoted in media stories about the current real estate market. The Rochon's have been featured on The Nightly News with Brian Williams, The Today Show, CNBC, The Washington Post, The Washington Examiner, WTOP News, Voted as The Best of DC Real Estate Agent in the Washington City Paper Readers Poll, and more...