The Real Estate Encyclopedia
How does the current model of real estate work with commissions?
Category - Home Selling Questions - Agent, Offer & Commissions FAQ's
There are basically two sides to a transaction…the listing side and the buyer side. When you list your home you'll negotiate the commission with your agent. In our example, the price of the home is $200,000 at a commission rate of 6%. When the home sells the homeowner will pay a total of $12,000 ($200,000 x .06 = $12,000) regardless of how the home is sold. The listing company (ABC Realty) will keep half the commission. In this case it's 3% or $6,000. The buying (XYZ Realty) company will receive the other 3% or $6,000. Once the ABC Realty has received the $6,000 commission they will split it with the listing agent. If the agent/company split is 60/40 then the listing agent will receive $3,600 ($6,000 x 60% = $3,600). ABC Realty will keep the difference of $2,400 ($6,000 x 40% = $2,400). The exact same thing will happen with XYZ Realty. The only difference is the buying agent and the company may have a different commission split (such as 50/50 or 70/30 or 65/35, etc.).


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Home Selling Questions - Agent, Offer & Commissions FAQ's
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