How do Realtors Get Paid?
Saturday, October 11th, 2014
One question I get asked from time to time is, “How do you get paid?”, and its a pretty good query. Some misinformed folks think a brokerage house provides a monthly salary, while others believe Realtors are paid from both the buyer and the seller of a property. Here’s how it all really goes down, in simplified terms:
Realtors work strictly on commission, payable at the close of a deal. That means the real estate agent who works to sell a home for three months, spending time and incurring costs, gets no money in return if the property doesn’t end up selling. That’s just a cost of doing business. The commission amount is negotiable, both in the total percentage and in the split between the listing and the selling agent. Traditionally in Calgary, for an average house, the commission works out to about 4 percent (7% of the first $100,000 + 3% of the balance) with half going to the seller’s agent and half to the buyer’s agent.
Some agents must also share their commission with their broker, meaning that an individual Realtor could end up with as little as a quarter of the commission on the sale as gross pay, depending on their broker agreement.
As Realtors, we are running a small business and as such have a laundry list of expenses that must be paid from the commissions: office space, technology updates, photography, home staging, advertising, MLS fees, and so on. To be successful, then, an agent must maintain a good number of listings and clients at all times, offer the absolute best possible customer service, give back to the community, and maintain a rainy day fund.
Hopefully this is illuminating to those thinking of buying or selling with a Realtor: know that the agent won’t get paid until they deliver a result, and a lot of that money is spoken for well in advance of the cheque being cashed. Not that one can’t make a very good living as an excellent Realtor, but you certainly earn your pay.
