For residential real estate transactions, the standard commission is 6% of the home's sale price, which is frequently divided equally. Three percent goes to the buyer's agent and the other 3% to the seller's agent.
For rental transactions, the standard commission is 10% of the value of the lease, or one month's rent. This commission is also usually divided equally between the renter’s and the landlord’s agent.
Who Pays the Commission?
The owner of the property is usually the one responsible for paying the commission when selling and renting a property. In a regular transaction the buyer and/or tenant normally does not pay commissions to his agent (unless a buyer's brokerage agreement has been also signed with the buyer). The landlord and/or the seller are normally responsible for the commission to both agents.
Do You Know How Real Estate Advisors Are Paid?
Real estate advisors aren't paid by the hour or by the work they perform. They only get paid for their work if the transaction is formally closed. An agent can spend days and months working with a buyer or seller. They don't get rewarded for their time if the buyer and seller don't go through with the transaction. Agents only get paid at closing.
Where Is the Commission Amount Stipulated?
The commission amount is stipulated in the listing agreement. The agreement stipulates the percentage of commission the agent will receive at closing and the percentage that will be offered to the agent representing the buyer/tenant. This percentage is posted in a multiple listing service (MLS). This way, the agents know what their compensation will be at closing.
When you are buying or selling a property, make sure to work with a real estate agent who has the required knowledge, experience, and tools to provide the support you need to make your transaction as safe as possible and to ensure it meets your financial and personal expectations.