All you need to know about real estate commissions
For residential real estate transactions, the standard commission is 6% of the home's sale price, which is divided equally. Three percent goes to the buyer's agent and the other 3% to the seller's agent.
For residential rent transactions, the standard commission is 10% of the value of the lease or one month's rent. This commission is divided equally for each of the agents involved in the transaction.
Who Pays the Commission?
The owner of the property is always the one responsible for paying the commission when selling and renting a property. The buyer and/or tenant NEVER PAY commissions to the agent. The landlord and/or the seller are responsible for the commission to both agents.
Did You Know Real Estate Consultants Are Paid?
Real estate consultants aren't paid by the hour, nor are they paid for the work they perform. They only get paid for their work if the transaction is formally closed. An agent can spend days and months working with a buyer or seller. They don't get rewarded for their time if the buyer and seller don't go through with the transaction. Agents only get paid at closing.
Where Is the Commission Amount Stipulated?
The commission amount is stipulated in the listing agreement. The agreement stipulates the percentage of commission the agent will receive at closing and the percentage that will be paid to the agent representing the buyer/tenant. This percentage is posted in a multiple listing service (MLS), along with the other data of the property. This way, the agents know what their compensation will be at closing. The support and advice of a professional real estate agent represent every dollar of the commission.
When you are buying or selling a property, make sure to work with a real estate agent who has the necessary knowledge, experience, and tools to provide the advice you need to make your transaction as safe as possible and to ensure it meets your financial and personal expectations.