How Commission Works in Real Estate

 

Something to keep in mind is that sellers can negotiate the commission, but buyers cannot. It’s also tax deductible! Here’s a breakdown of exactly where that commission fee ends up:

Paid by Seller

When signing a listing agreement, the seller acknowledges the commission rate they will need to pay, which is typically 6 percent. This amount is generally split between the seller’s agent and buyer’s agent.

Buyer Agency

Let’s assume that in this case, the commission is 6 percent. The buyer’s agency would then receive 3 percent of the sale price. This will be split between the buyer’s agent and the buyer’s broker. The percentage the buyer’s agent ends up receiving will vary from half to all of the 3 percent, and is determined by an agreement with the broker.

Seller Agency

Again, let’s say the commission is 6 percent. The seller’s agency gets 3 percent of the sale price, which is split between the seller’s agent and the seller’s broker. The seller’s agent will receive from half to all of the 3 percent, and is determined by an agreement with the broker.

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