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How Real Estate Commission Works

The Swan Team
May 29, 2018
4 min read

How does real estate commission work? This is one of the most common questions that we get. It matters who you work with and how your Realtor® answers your questions. And, the answer is different depending on if you are a selling or buying a home.

Whether you are a home seller or a home buyer, you should expect your Realtor® to earn their commission by providing you with extraordinary service. At The Swan Team, we take it a step further. We believe extraordinary service equals our commitment to treating our clients like family and exceeding their expectations whether buying or selling.

How Does your Listing Agent Earn their Commission?

By achieving your expectations for the sale of your home. Every homeowner has a different motivation to sell. Every home has a different story to tell. Your listing agent earns their commission by making your home stand out to buyers.

There’s a lot of preparation that goes into getting your home ready for sale. The average realtor can enter information into the MLS system, post a for sale sign, and put your home on the market. We go above and beyond your expectations when it comes to marketing your home. The Swan Team wants buyers to know what makes your home special.

Want to sell your home, but don't know where to start?

Download your FREE Seller Guidebook HERE!

How Does your Buyer Agent Earn their Commission?

By achieving your expectations for the purchase of your home. Every home buyer has different housing wants and needs. Your buyer agent earns their commission by securing a home to fit your search parameters and your budget.

There’s a lot of preparation that goes into purchasing a home. The average realtor can set up an automated home search, show homes on the market, and write an offer. At The Swan Team, we take as much time as you need to look for homes until you find "the one."

Ready to buy a home, but don't know where to start?

Download your FREE Buyer Guidebook HERE!

How Much is Real Estate Commission?

Typically, real estate commission is 5%–6% of the home’s sale price. In most cases, the listing agent receives 2.5%–3% in commission and the buyer agent receives 2.5%-3% in commission.

Who Pays the Commission?

If you are buying a home, you don’t have to pay real estate agent commission; however, you still have to pay closing costs. If you are selling a home, you pay commission to both your agent and the buyer agent when your house closes.

How Does Commission Work for Buyers?

The home seller pays the commission for both the listing agent and the buyer agent. But, that doesn’t mean that there is no cost to the buyer. Sellers sometimes account for the fee they’ll be paying in their listing price.

What Should You Expect from your Realtor®?

The simplest answer is that Realtors® get paid for results. If you are a home seller, your listing agent earns their commission by selling your home for top dollar in the shortest time possible. If you are a home buyer, your buyer agent earns their commission by finding you the home of your dreams for fair market value. If we don’t get results, we don’t earn our commission.

Do you Have to Pay Commission if you Don’t Buy a Home?

Realtors® are paid at the end of the process. So if you don’t buy a home, your agent won’t be paid for their time. However, if you decide you don’t like your agent and want to work with someone new, it may be difficult to break up with them if you’ve signed a contract (also known as a buyer’s agency agreement). Make sure to ask the right questions before signing a contract!

Do you Have to Pay Commission if your Home Doesn’t Sell?

Short answer: Most likely not. Listing agents are paid when you sell your home, so if your home doesn’t sell, you shouldn’t owe them a commission. Long answer: Read the fine print. Typically, your contract with your listing agent is bound to a certain time period. Unless your contract says otherwise, you are typically not required to pay your agent if the contract expires and your home doesn’t sell.

Love Where You Live. Give Where You Love. We understand that your home is your dream come true. As homeowners, we realize that purchasing a home is probably the most important transaction you will manage. As neighbors, we get that buying and selling a home is perhaps the biggest transition your family will make. You deserve to love where you live and give where you love!