Real estate agents are generally paid through commissions. When a home sells, a percentage of that sale price goes to the agent. This means that the agent has motivation to work hard to make a sale. It also means that people do not have to invest money in paying an agent without the guarantee of getting a house.
With that being said, there are usually two agents involved in any particular sale. The seller will have their own agent, as will the buyer. These agents generally have to work together and split the commission that they get. For example, 6% is a very common commission for a real estate agent in Florida. This would mean that both agents would actually take home 3% of the sale price.
Who has to pay?
The good news for buyers is that closing costs are often covered by the sellers. Of course, every contract can be negotiated, so each case is going to be unique. But the sellers generally pay agent fees out of the money that they earn from selling their house.
Another potential option that is sometimes utilized is to roll the cost of closing into the loan. This means that the buyer will slowly be paying off that fee over the course of the mortgage – but they still don’t need to have the money up front.
Can this be negotiated?
Yes, the amount paid in a real estate commission can be negotiated. Some agents will work for 5%. Additionally, some buyers don’t use a real estate agent at all. This can be a benefit for the seller’s agent. They get to keep 100% of the money that they make in that sale, doubling their return for the same work.
Navigating payment issues
In some cases, real estate agents will not be paid on time, they will not be paid the proper amount or they will not be paid at all. This can lead to serious disputes between those involved. With so much money on the line, everyone needs to make sure that they know exactly what their rights and legal options are. Seeking legal guidance proactively is usually a good idea.