How Do Real Estate Agents Get Paid?

Most people probably realize that real estate agents get paid by commission, but who pays that commission?


The answer is, it depends.  The most common scenario is that an agent is paid by the seller when the house is sold.


Usually, the seller enters into a listing agreement with the listing agent to pay some percentage to the listing agent when his home is sold.  The listing agent then agrees to share some of that commission with the agent who brings the buyer who buys the home.


Another option is that the bank might actually pay the commission to both the buyer’s agent and the seller’s agent.  This happens in two situations.


First, the bank might be the actual owner of the home because the bank foreclosed on the home.  In this case, the bank operates just like the usual seller might, entering into a listing agreement with the listing agent who then shares the commission with the buyer’s agent.


Bank Owned Home


The bank also, in essence, pays the real estate agents’ commission when there is a short sale.  In a short sale, the commission is paid from the proceeds of the sale, and the bank takes the remainder.


The third option is that the buyer could pay the buyer’s agent’s commission.  This might occur, for instance, when the buyer wants the agent to represent him where a home is for sale by owner and the owner isn’t paying any commissions.


Many people may not understand that buyers’ agents are not paid unless they are the agent who writes the contract/offer for the buyer.  If an agent were to show someone 15 homes and educate the buyer about current market conditions and then the buyer were to walk into an open house and write an offer with the agent who was there, the agent who had shown them homes would not be compensated in any way for the time spent with the buyer.


Buyers have the right to choose the best agent to represent them, just as sellers do.  However, like sellers, I believe that buyers should commit to that agent so that when the buyers do find the right home, the agent is compensated for all the work done.


Some buyers want the opportunity to work with several different agents or to only work directly with the listing agent; I believe this is their right.  However, I believe they should communicate this to the agents with whom they are working. 


It is my usual practice to have my buyers sign an agreement to work with me, just as I do with my sellers.


I believe in educating my buyers, and I believe that my time and my knowledge and expertise are worthwhile, and I choose not to spend large amouns of time with buyers who are not committed to working solely with me as their consultant.


About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.

Click for a free list of Orange County foreclosures or a free list of Orange County short sales or e-mail Me!

Are you upside down in your home? Is it worth less than you owe? Are you concerned about making your mortgage payment? Contact me at or 714-319-9751 to discuss your options.

Want to buy a home or to list your property for sale in Newport Beach, Costa Mesa, Huntington Beach or Orange County? Contact me at or 714-319-9751 to learn about her system which will make your buying and selling experience easier.

Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.

Click Orange County homes for saleto view all OC homes for sale. Copyright © 2009 by Christine Donovan, All Rights Reserved. How Do Real Estate Agents Get Paid?

Leave a Reply

Your email address will not be published. Required fields are marked *