How Do Real Estate Agents Get Paid?

Many people are under the assumption that Real Estate Agents get paid a salary by their Sponsoring Brokerage. This is far from the truth.

Real Estate Agents are Self-employed, which means that a Realtor does NOT receive a salary, company car, an expense account, vacation pay, insurance or retirement benefits, etc. In addition to these expenses, the Realtor also pays licensing renewal fees, continuing education fees, monthly Multiple Listing Service Fees and annual membership dues in local, state and national Realtor Associations.

Each Realtor has a contractual agreement with their perspective company. This agreement states that the individual may list and sell real estate as an Independent Contractor representing the Sponsoring Broker.

A Realtor only gets paid when they go to a closing and receive a commission check on the property that was sold. At the time of closing, the real estate commission is subtracted from the Seller's Proceeds. This commission is then divided between the company and the Realtor representing the Seller, and the company and Realtor assisting the Buyer.

For example, if the property is sold for $100,000 - the commission (usually 6%) is $6,000. This is divided in half between the Selling Broker and the Buyer's Broker. Then the Selling Broker splits its $3,000 with the Selling Agent and the Buyer's Broker splits its $3,000 with the Buyer's Agent. As you can see, typically on a $100,000 property, the agents actually each make about $1,500. Out of this commission, the agent then pays for marketing, licensing fees, insurance, gas, etc.

If you have any questions about this information, email Michelle Fradella or call her at 601-569-0075 or 601-799-1848.