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How Real Estate Agents Get Paid

by | Jan 5, 2024 | Selling

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Trying to navigate a real estate transaction can feel like learning a new language. There’s a big difference between knowing the basics and being fluent and visiting a country where you only know how to say “Hi” and “Where is the bathroom?”

A reliable real estate agent can serve as your translator and guide, helping you expertly navigate the jargon until you reach your ultimate goal: closing day. 

Have you ever wondered how these agents are compensated for their hard work? Let’s delve into the details!

The Commission Split

A common misconception is that both buyers and sellers are responsible for paying their real estate agent. While there is a current movement in the real estate industry to separate commissions, the conventional practice remains that the seller covers the commission for BOTH agents.

This process can be summarized in two steps:

  1. The listing agent agrees upon an overall commission amount with the seller, typically around 6% of the home sale.
  2. A portion of the commission is allocated to the buyer’s agent. Buyer’s agents can view the offered amount for each home on the MLS, the website used by agents to access and present listing details.
    1. The split between listing agent and buyer’s agent is not regulated, so listing agents sometimes opt to take a larger cut.

Ultimately, the commission amount a seller offers is always negotiable. Buyer’s agents are legally expected to present the best-fit houses to their clients regardless of how much they’ll make—however, some agents may skirt this expectation if a seller is offering less than average. This gray area results in a disservice to both buyers AND sellers.

Real Estate CommissionsWhat 6% Really Means

A 6% commission may appear insignificant until you consider the cost of an average home. For instance, on a $500,000 home sale, the commission amounts to a whopping $30,000! While hiring an agent is beneficial, a $30,000 price tag is substantial. Since traditional agents rely purely on commission to get paid, they’ll often present points like…

  • “Half of the commission is going to the other agent”
  • “My brokerage requires me to pay them a hefty percentage of my commission”
  • “As an independent contractor, I’m hit with a heavy income tax bill each year”

We’re not saying those statements aren’t true at traditional brokerages—we’re saying it’s a broken system. At Trelora, we shook up that system by employing full-time, salaried agents.

The Reality of Commission-Based Agents

With shows like House Hunters and Selling Sunset becoming popular, many people have considered how much fun it would be to work as an agent.

However, working in real estate isn’t as easy and glamorous as TV makes it look. You’re responsible for finding your own clients, acting as their guide (even during YOUR first transaction!), ensuring everything goes smoothly enough to reach closing…and then you have to start all over again.

Between covering business costs and not seeing their first commission check for months (if they’re lucky), most agents start off in a financially precarious position. Even well into their real-estate career, many agents end up needing a second or third source of income.

In a real estate transaction, it’s crucial to be able to reach your agent when you need them. Unfortunately, that can be difficult if they work another job.

At Trelora, we recognize that giving agents a salary allows them to properly serve their clients without worrying about putting food on the table. This allows for a much better experience for everyone involved.

What About For Sale By Owner (FSBO)?

You may be thinking, “Couldn’t I just list my home myself and save a lot of money?”

In theory, yes…in practice, probably not. Without expert guidance, many FSBO sellers end up leaving a lot of money on the table. They don’t know how to get the most eyes on their home or what terms to look for to avoid hidden costs. Also, leaving money on the table implies that the deal actually reaches the closing table—which the majority of FSBO deals do not.

Think about all the professionals you have in your life. You may have a go-to doctor, mechanic, landscaper…basically, any professional service you need. When you’re dealing with one of the biggest transactions of your life—a home sale—wouldn’t you want that same professional guidance?

Trelora was founded to ensure sellers receive full-service assistance without overpaying.

The Trelora Difference

By listing with Trelora, you’ll save thousands under our 1% listing fee policy (paid at closing).

When you buy with Trelora, you won’t be pressured into the wrong home just so your agent gets a commission check. Since Trelora agents are salaried, they take the time to truly match you with the perfect home.

If you think paying less for the same service is too good to be true, think again. Most brokerages charge more simply because they’re able to get away with it. Trelora believes in disrupting the current status quo to provide top-notch service at a reasonable price.

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The information contained in this blog is for general information purposes only, and while believed to be accurate, Trelora assumes no legal responsibility for accuracy. Information provided within should not relied upon as legal advice. Please consult with your local advisors for independent information regarding availability and applicability in your market.