I hope that after reading this you will have a better understanding of how real estate agents get paid. Of course this only pertains to our office, but you will get the general idea.
I will try and keep this as simple as possible and of course if you have any questions or comments I will do my best to answer.
I am going to use an example on a $250,000 home based on a 6% commission. The total commission from you (if you are the seller) is $15,000 wow! that is a lot of money. I agree it is. Lets break it down. Generally I don't like doing both sides as I feel you cannot represent the seller 100% and the buyer 100%. So if a buyers agent is involved (which is about 80% of the time) the commission is split 50/50. That would be 50% to the listing office and 50% to the selling agents office. Lets say in this example I am representing the seller. Right off the top I have to pay 8% to corporate. 8%x $7500=$600 that leaves $6900. Of that the office gets 20%. 20%x$6900=$1380. That leaves $5520-$60 for errs and omission insurance. Now we are down to $5460. Lets say I have about $500 in advertising which leaves $4960. Thats not bad pay for selling someone's house right? Yes it is except now Uncle Sam comes calling. I have to pay double taxes yes double why? because if you are independently employed you don't have someone paying your other half. When I was employed at the mill I was paying 19% in taxes, So now I roughly pay 38%. I will have deductions so lets say 35%x$4960=$1736. That leaves $3224. I don't have any benefits, have to pay my own health insurance.
