Most real estate agents bill sellers approximately six percent of the sales price. Russ Whitney says nearly nine out of 10 real estate agents work on commission, and are paid only when the transaction closes. Real estate agents are the only who work this way.
According to the licensing law, Russ Whitney states that only licensed brokers or agents have the legal responsibilities of operating the brokerage.They can negotiate contracts, it’s the broker’s company name and signature on the listing contract.
Commissions are paid according to the terms of two contracts – the listing agreement and the sales contract.The five, six or seven percent commission that is negotiated is given to the listing agent, or listing broker.
The listing broker discloses the terms of the commissions to other competing brokers, so they will bring their buyers to the listing.When the buyer’s broker presents a contract to the seller, it will include a provision to collect their share of sales commission which is split in four ways:
- Listing broker or agent
- Listing salesperson
- Buyer’s broker or agent
- Buyer’s salesperson
At closing, the listing agent is paid by the escrow agent out of the seller’s proceeds,when the buyer’s loan is funded by the lender. The listing agent, pays the buyer’s agent share of the sales commission.All commissions are negotiable says Russ Whitney, but sellers should keep in mind that commissions are incentives.