Realty Agent Paid Less Than Public Thinks

Real estate consumers see commissions paid to brokerages between 4-8% and feel that as home prices rise, agents are over compensated. Consumers would be surprised at how little of the commission actually shows up in their agent's wallet. Most real estate transactions have a listing (seller's) agent and a cooperating (buyer's) agent from different brokerages. Most agents have to split their commission with their brokerages in exchange for, marketing, administrative and technology services. Industry sources state the cost to a brokerage on average is $17,000 per year to provide services to an agent.

Fast fact. 2002 Median Gross Personal Income of REALTORSĀ®: All REALTORSĀ®: $52,200 Sales Agents: $39,300 Brokers/Broker-Associates: $65,300 Source: The 2003 National Association of REALTORSĀ® Member Profile

Fast tip. When negotiating your listing agreement with a full service brokerage include a clause stating if your property sells in a short period of time the commission paid to the brokerage for the listing side will be reduced as their costs will be reduced.

Fast term. Commission Split: A percentage of a brokerages compensation from a property commission paid to a real estate broker or salesperson representing the brokerage in a transaction.

Real estate help desk. Dear Mark: We are considering selling our home by owner, but want to hire a brokerage that would place it in our Multiple Listing Service for a flat fee. We would still pay the buyers broker the typical cooperating commission. Could you explain how a commission is usually paid out? Terri, San Francisco, California

Dear Terri: Here is an example:

A property sells for $100,000. The seller pays a commission to his or her listing broker of 5% = $5,000.

The listing broker pays a cooperating commission to the buyer's broker of 2.5% = $2,500.

The listing broker pays a split of 65% of the listing side of the 2.5% to the listing agent: 2.5% = $2,500