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Real Estate Commissions: A Guide to Who Pays, How Much and More

When a real estate agent facilitates the sale of a home, business or piece of property, they receive a real estate commission. For most real estate agents, this how they are paid for performing their job – the majority of agents do not receive a salary and are paid commission only. If you need a real estate agent to help you buy or sell a home, you may wonder who pays the real estate commission and how much it costs. Here is a guide to real estate commissions and how it affects a real estate transaction.

What Does a Real Estate Commission Cover?

Many real estate agents are independent contractors that are not paid a salary by the firm they represent. Instead, they are paid out of the real estate commission that is deducted from the sale price of the property. If the real estate commission is 6% and the home sells for $250,000, the commission would be $15,000. While that may sound like a large amount, this does not all go to the agent. It is split between the seller and buyer agents and it covers various costs that both need to pay throughout the sales process. This includes marketing, open houses, negotiations, documentation and listing costs paid by the agent and real estate agency.  

Who Pays the Real Estate Agent Commission?

In most real estate transactions, there will be two agents, one for the seller and one for the buyer. Both need to be paid from the sale; but in the majority of transactions, only the seller will pay the agent commissions. The real estate commission is usually based on the final sale price and is subtracted from the seller’s proceeds during the escrow process. My buyers do not pay an agent commission.

How Much Is a Home Commission?

There is not a set amount of commission paid on home sales to real estate agents, but it tends to be 6% of the selling price. There are no regulations or rules on real estate commissions, meaning agents can charge as little or as much as they choose and split it various ways. Usually a home commission is split evenly between the buyer and seller agent – if the commission is set at 6%, each agent may receive 3% of the selling price at closing.

Is the Agent Commission Worth the Cost?

You can avoid paying a real estate commission by not using a real estate agent to sell your home. However, this means you will need to perform all the legalities, paperwork and marketing tasks yourself. This can be time consuming and there are many legal issues that can put your investment at risk if not handled correctly. In addition, the right marketing and negotiations can help obtain a higher price for your property, which can make it more than worth the cost of paying the agent’s commission.

When you work with me to find the perfect home or to facilitate the sale of your home on The Main Line, I will work tirelessly to earn my agent commission. I provide effective marketing, advanced reporting and constant communication throughout the sales process. Contact me today and let me help you with your next real estate transaction.

See you next time. 

Jennifer Sofield

Paoli

Malvern

Daylesford

Devon

Berwyn

Radnor

Lower Merion

Strafford

Villanova

Bryn Mawr

Wayne

Gladwyne

Penn Valley

Saint Davids

Rosemont

Haverford

Narberth

Ardmore

Bala Cynwyd

Wynnewood

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Buying or Selling a Home on The Main Line?

Copass Real Estate -Main Line

Compass RE - Jennifer Sofield - Agent

Suburban Square

6 E Montgomery Avenue, Suite 105

Ardmore, PA 19003

Jennifer Sofield is a team of Pennsylvania real estate licensee affiliated with Compass RE and the Town & Line Team. Compass RE is a licensed real estate broker and abides by equal housing opportunity laws. All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to accuracy of any description. All measurements and square footages are approximate. This is not intended to solicit property already listed. Nothing herein shall be construed as legal, accounting or other professional advice outside the realm of real estate brokerage. Compass RE Main Line office phone:  (610) 822-3356. Broker of Record: John Bilek. 

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