How Are Real Estate Agents Compensated?

 

These days, it seems that everyone is licensed to sell real property. The role of a Realtor is like that of a superhero. They can be a teacher during work hours and a realtor on weekends and nights. You may have wondered what the compensation of real estate agents is if you are considering a career in this field. A commission is paid to realtors or a percentage from the sale price. Realtors In Sedona Arizona The commission can be split in many ways. We'll be discussing a few of these splits in this article.

First, agents may split their commissions with brokers. A broker is responsible for managing a real estate office. These brokers are real estate agents. They can work from home or in an office, but ultimately they answer to the broker who in turn is responsible for the service. There are a few factors that determine the percentage of the split. Some brokers and agents split the percentage 50/50 while others split it differently. The percentage of the split is determined by two factors: the amount of assistance the broker provided and the volume of business the agent brought in. The broker/agent split can be illustrated as follows: If the commission earned is $10,000 and the broker/agent agree to a 50/50 split then the real estate agent will take home $5,000

A 100% commission payment is another compensation option. This sounds great, right? The agent may pay a monthly fee to the office to have their name endorsed by the company or office. Agents can generate more business by having an office or "brand" behind them. Agents are willing to pay the monthly fee to receive the full commission. However, the monthly fee can be quite high. The costs are limited, but the income potential is unlimited. This method of compensation is not as effective for new agents as they don't have enough work to justify the fees. A seasoned agent might have to pay $1000 monthly to an office. However, if they earn $10,000 in commissions, they will be up $9,000 per month. They get $9,000, instead of the $5,000 they receive in the broker/agent split. They are still down $1000 if they do not make any sales during the month. The broker/agent split would not allow the same agent to lose any commissions for failing to make a sale.

Some agents receive compensation based on referrals. This is where an agent (Agent A), refers a buyer or seller to an agent (Agent B) located in another state. Agent A might charge a 25% referral fee. Agent A could receive $2,500 if Agent B sells to Agent A. Agent B would get the $10,000 commission. The referral fee paid by Agent A is included in the commission. Agent B could then split the difference with his broker (in a broker/agent split) or take 100% (after paying his monthly office fee), if the agent works under the 100% compensation method.