Real Estate

by Bobbi Holmes

What is a Realtor?

            Not all real estate licensees are Realtors.  A Realtor is a member of the National Association of Realtors (NAR), which is an organization for real estate professionals. Those who join NAR pledge to abide by a code of ethics established by the association.

 Real Estate Commission

             Traditionally, the buyer pays nothing. Normally, the seller’s agent pays the buyer’s agent. The seller’s agent pays the buyer’s agent from the commission earned from the seller. Typically, the seller pays his agent a percentage of the final sale price.
            What is the standard commission?  There is none. You can negotiate the commission rate. Yet, like anything else, ask yourself what you are paying for.  You might discover it is to your advantage to choose a broker who charges a higher commission, because he is offering more in advertising and services. 

 What Happens to the Commission?

            Where does the commission go?  For demonstration purposes, let’s create an imaginary listing. Let’s say our imaginary broker lists a $150,000 house at 6% commission = $9,000.
            While the listing broker sets the commission, it does not mean  the broker gets to keep all the commission.  If the agent plans to list your house on a multiple listing service, he or she will need to offer a portion of the commission to the buyer’s agent. 
            In our imaginary listing the broker offers half the commission to the buyer’s broker.  That leaves $4,500.  The broker and agent divide that portion of commission.  If an office is a 50/50 office, the $4,500 is now divided again, between the agent (the person you know as your real estate agent), and the broker (the entity that your agent works under.)  From the broker’s share of $2,250 goes to pay various expenses, such as advertising, business fees and insurance.  In some offices, the broker regularly advertises in several local papers and publications, along with radio ads.  Other expenses  include items such as rent, phone, office supplies, signs, and other operating costs associated with running a business.
            Of the agent’s share ($2,250) the agent pays fees and dues for the Realtor association or other licensing fees, insurance, lock box fees, personal business expenses, such as continuing education courses, cell phone and automobile, and additional advertising or other expenses associated with selling the property.  Whatever is left, from the $2,250 is the paycheck for doing a job.

What is the Realtor’s Job?