How do Realtors get paid?

When I became a real estate agent, I quickly grew aware of how misinformed the public is about realtor’s compensation.  There are many misconceptions out there.  Let me explain with some Facts:

  • Realtors are Commission Only.
    • Real Estate Agents ONLY get paid when a transaction closes.  If your realtor spends countless hours showing you homes, writing up contracts, doing research, etc. and you NEVER make it to the closing table, then that Professional has lost money, time and effort.
  • Buyers do NOT pay the Realtor that represents them.
    • Unless a buyer wants to compensate their Realtor for a job well done, they are not obligated pay a commission.
  • Sellers pay the Realtor that represents them, as well as the Realtor that brings them a buyer.
    • If you’re thinking about selling your home, make sure you build real estate commissions into your net sales sheet.  The realtor that represents you will split the commission with the buyer’s agent.


  • Don’t call the listing agent on the sign.
    • Some buyers think they shouldn’t call the listing agent on the For Sale sign for more information because they’re representing the seller.  If you’re not already working with a realtor, there’s a win-win opportunity for everyone.  You have the negotiating power to get a better deal on the house because the seller may not have to pay the full 6% commission, maybe 4% instead.  The listing agent wins because that’s more than the 3% and the buyer wins because they get more money off of the house!
  • When building a home, I don’t need a Realtor.
    • If you’re working with an agent who is showing you homes and you stumble upon a new development by yourself, the first question the sales center will ask you is “Do you have agent representation?”  Time and time again, buyers will say “no” when they actually ARE!  Buyers are under the impression that if they DON’T use a realtor they’ll get a better deal.  The builder is going to pay commissions no matter what, whether it’s to your agent or the one that you just met at the door in the sales center.  They will end up making more money off of you on every end of the deal when you walk into those doors without representation.  The on site sales person represents the SELLER, not YOU (the buyer). It is VERY important that you have an agent to protect your interest! I have been able to help my new construction buyers save money and get more upgrades over and over again because of outside negotiation.  If you’re thinking of buying a brand new builder product, help your Realtor by putting their name down on your registration sheet.
  • Realtors get all their leads online.
    • We rely heavily on our Friends & Family.  The major secondary source of income for Realtors is by referrals.  I have a friend in SC that needed to put her house up for sale.  I interviews several agents and found a good fit for her. Viola, a 25% referral fee for me, paid by that broker.  People don’t realize that they could help put money directly in the licensee’s pocket simply by a referral!

Managing Broker for The PELL Team
239.292.9404 (c) | 239.989.0138 (f)
“Buy or Sell…Think Pell!” ™

Posted on April 19, 2012, in Real Estate and tagged , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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