Real Estate FAQ'S
Understanding How Agents Are Paid
- The income agents receive for representing buyers and sellers in a transaction is paid as a commission which is typically a percentage of the purchase price of the home.
- Agents usually are not employees. Therefore, the only compensation they receive is their commission.
- Agents receive a commission payment only after a transaction closes. If buyers and sellers do not close on a transaction, the agents do not get paid a commission. There are some exceptions that can apply to sellers who cancel a listing.
- If the property is listed on the MLS (Multiple Listing Service) most often the commission is paid by the seller to his listing agent, who then splits the commission with the buyer’s agent after closing.
- In most cases, both agents split their portion with their brokerage. Because agents are Independent Contractors and not employees, they pay for their own expenses out of the income they make. Typical expenses are: computers, cars, cameras, telephones, referral fees, advertising, education, taxes, social security, medical insurance, etc.
- In some cases, a buyer may compensate a buyer’s agent directly, but at no time can an agent receive compensation from more than one party without disclosing it to all the parties.
Agency Relationships
When real estate professional work with buyers and sellers, “agency” relationships are established. There are three kinds of agency relationships:
- Buyer’s Agent: represents the buyer during the home buying process. The buyer’s real estate professional (agent) has a fiduciary responsibility to represent the buyer’s best interests including reasonable care, loyalty and confidentiality.
- Seller’s Agent: represents the interest of the seller and has fiduciary responsibility of reasonable care, loyalty, confidentiality and disclosure to the seller. A seller’s real estate professional (agent) works to assist the seller in locating a buyer and negotiating a transaction suitable to the seller’s specific needs.
- Dual Agent: represents the interests of both the buyer and the seller, during the same transaction. A dual agent has responsibilities to both buyer and seller and must act in the best interest of both parties
|
