Agent Commission comes up frequently and so I’ve decided to discuss it briefly here. I’d like to prelude this by saying that if you are a buyer purchasing a home, there are no costs to you for working with an agent.
Every agent has a commission they charge to list your home and it can vary from agent to agent. What the listing agent seldom discusses or explains to a seller is how that commission is shared & divided. Let’s say that an agent tells you their commission is 6% to list and sell your home. This percentage is going to be shared with the Buyer’s Agent, the buyer’s agent brokerage firm, the Listing Agents’s brokerage firm and if applicable, the agent or agency that referred the business to the agent. What is rarely discussed at a listing appointment (because the seller seldom knows to ask) is “what percentage, Mr. Listing Agent, will you be offering the Buyer’s Agent?”.
This is an important question. The buyer’s agent get’s paid out of the percentage that the Listing Agent has contracted with the seller. This percentage is noted in RMLS with each listing. Now, on the average I see the BAC (Buyer’s Agent Commission) at 2.5. If the average is 2.5, and the Listing Agent is only offering 2.0% to the buyer’s agent who brings a buyer to the table what do you suppose is the possibility that the other agent will choose to show the home with a 2.5 BAC vs. the 2.0? Unethical? Yes, but it can happend and I guarantee that it does, especially if there’s a 3.0 BAC on the tour list line-up. I’m a bit off topic so focusing again on Listing Agent Commission:
HERE’S AN EXAMPLE:
- Sale Price = $200,000
- 6% Commission = $12,000
- Less 2.5% BAC (Buyer Agent Commiss) at $5,000= $7,000
- $7,000 – Listing Commission less a possible 40% referral Fee = $4,200
- $4,200 – Listing Commission less 25 % Brokerage Frim Cut = $3,150
- $3,150 – Listing Commission less 30 % Taxes = $2,205
- $2,205 – Listing Commission less advertising expenses, etc.
Tags: agent commissions, Commissions, fees, realtor paid