Real estate is a variable market, and due to the occasional volatility, real estate agents must work hard for what they earn. Typically, when a real estate agent puts up a house for sale or rent, the only money they earn will be from the commission of that sale or rental agreement. The important thing to know for both the buyers and the real estate agent is what percentage of the transaction that the real estate agent will get.
Because real estate markets vary depending on the area, a house for sale in one city can net a real estate agent thousands more than a house or rental property in another city. A standard listing agreement that the buyer commits to usually provides a real estate agent with a percentage between one and ten percent. If the real estate agent is working with a brokerage, their percentage of the sale is often then cut in half, with half going to the agent and the other half going to the brokerage. This is why many real estate agents in their first few years of the job often make less than $40,000 a year, because they are still trying to build a client list and be a part of great deals.
In larger cities, many buyers will also use a real estate agent when they are looking at properties for rent, whether it is a residential property or a commercial space. The way agents are paid in this case is slightly different than a property sale. For rentals, real estate agents are paid a broker’s fee for finding an apartment or commercial space for the buyer. These rates can be anywhere from one to ten percent of the first year’s rent. In these cases, this broker’s fee can either be paid by the renter or by the property owner, depending on the type of agreement signed and who hired the agent.
No matter what the listing agreement lists as the commission percentage, buyers and sellers always have the right to negotiate the terms of the agreement, especially if any of the terms seem unreasonable to either party in the agreement.
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