The real estate market is a complex one, and most homebuyers and sellers don’t
spend much time thinking about how exactly their agents make money. But it’s a
fact of life in the real estate industry that compensation comes from somewhere, or
no one would work. Office furniture, copy machines and yard signs don’t pay for
themselves, so it must come from the transaction fees real estate agents collect.
When interviewing a potential real estate agent, it’s good to know how the agent
plans to get paid. The answer can help you decide whether the agent is a good fit for
Most agents are paid a commission, but some—typically those who work for discount brokerages such as Redfin—get a salary in addition to their commission. And some agents, especially those who represent buyers and are working with a buyer’s agent, offer commission rebates to their clients.
Generally, a home seller pays the commission for both the agent who represents
them and the agent representing whoever buys their home. But this isn’t necessarily
a set amount, and it’s also not something that’s negotiated or guaranteed in any
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Many home sellers are surprised to learn that they can negotiate the commission
rate for both their own agent and the agent who represents a buyer. And in some
cases, a seller can choose to not pay the buyer’s agent fee at all.
If you’re selling your home, a good way to approach the negotiation is to start by
asking what the average commission rate is in your area. This will give you a sense
of what’s normal, and then you can ask your agent for a lower commission rate
based on the value they think they’ll bring to the transaction.
Another thing to consider is the length of time you’re willing to give your agent to
sell your home. Ideally, you want to find an agent who has experience in your
neighborhood, and can tell you the ins and outs of the community, including things
like crime rates, schools, transportation options, public amenities and cultural
Be wary of any agents who say they won’t negotiate on commission, as that’s
usually a red flag that they might be unprepared for a challenging transaction. And
always be sure to sign a written contract before working with any real estate agent,
as this ensures that they won’t be sharing details about you or your home with other
agents and prospective buyers. This will help you avoid any misunderstandings or
disputes down the line.