Get Your Mortgage Rate Quote in Just 30 Seconds

Mortgage rates change every day, and your rate will vary based on your location, finances, and other factors. Get your FREE customized rate comparison below.

Real Estate Agent Commission and Fees: What Are They and Who Pays?

Real estate broker fees for both the buying and the selling broker are typically paid for by the seller.

Most of the broker fees hover around 5%- 6% and is split between the buyer and seller’s broker. Each real estate broker would be getting anywhere from 2.5%-3% as a commission when the sale closes.

These fees are negotiated on the front end by the seller’s real estate agent. The cooperating broker who decides to show you the home, will know how much that number is before setting up a showing.

But you as a buyer, pay nothing to work with a buyer’s agent. Thus, it would be to your benefit to contract a real estate professional that is working for you, that someone else is paying for.

Real Estate Disclosure Form

This form helps parties understand the role of the real estate agent in the transaction.

Some buyer agents may ask you to sign an agency agreement right off the bat. This informs all parties about who is representing whom. In this case, You. Whether you sign it on the font end or the back end, it is a mandatory state and national disclosure that is required.

Seller’s agents have this state required disclosure filled out as soon as the seller decides to list the house with the selling real estate agent.

Once in a while there will be something called a dual agency. This is where the real estate agent represents both the buyer and the seller in a neutral capacity. This form gives informed consent that is signed by both parties.

When do real estate agents get paid their commission?

First off, real estate agents don’t get paid by the hour, are 100% commission based and 1099’s. They only get paid if the deal goes through.

You can be working with one for two years, and they get paid nothing. So, imagine all the hours, phone calls, showings, emails and other forms of communication or information they worked for and are not get paid.

They only get paid at closing…but even have one more step to go before actually being able to deposit that check in the bank.

At closing, the check is cut by the attorney or escrow company for the agreed amount. This amount doesn’t go directly to the real estate agent, it goes to the agent’s principal broker. The principal broker then takes their cut from the agent’s check, then writes a check to the real estate agent.

Only then does it make it to your agent’s bank.

Other Real Estate Agent Fees

There are other forms of real estate aside from houses that also require commissions to be paid, that are outside of buying or selling of a house.

Vacant land for instance can be anywhere from 10%-20% commission since it takes much longer to sell this type of real property than a home.

You also have rental commissions. In typical marketplaces the landlord will give an incentive of about $300-$500 for a rental referral.

In Manhattan, it is the renter who pays the real estate agent’s fee. That fee is a hefty 15% of an annual rental contract. If you rent a typical $3000 one bedroom, you will be paying $5400 in broker fees alone.

Commercial brokers typically fall between 4%-8% for deals under $1m, but that number goes down as the sale price goes up.

Popular posts

7 Refinance Strategies
7 Refinance Strategies

Refinance to a lower interest rate: If interest rates have dropped since you took out your original mortgage, refinancing to a lower rate can help you save money on your monthly payments and reduce the overall cost of your loan. Refinance to a shorter loan term:...

7 Refinance Strategies
Is Refinancing With Your Present Lender Preferable?

Do Not Accept the First Refinancing Offer You Receive Homeowners should not accept the first refinancing rate provided to them. This is particularly important if you are applying with your existing lender. Some mortgage lenders have mechanisms in place that prioritize...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

No Results Found

The page you requested could not be found. Try refining your search, or use the navigation above to locate the post.