Hey, guys, you know what I get this question all the time what is Real Estate Brokerage Fee and What is the Commission’s, what are you paying to sell your house. I like to not clarify it because a lot of people think that whatever is in the contract is only for the listing agent and then in addition to that that they have to pay the buyer’s agent.
Real Estate Brokerage Fee?
But it kind of works like this is a really super simple version of it but your house is selling for $500,000 and let’s say policy commission contracted 6%. So what would end up happening is when the house is sold that commission is split in half usually that’s generally how it works and the buying brokerage gets 3% or half of the 6%.
Whatever they do it is is up to them and it’s important that you making sure that you’re paying a fair commission to the buyer brokers I’ll talk about that after listing brokerage.
What the listing brokerage gets
So what you’re sitting now with an agent that agent is very likely working for a brokerage. that brokerage oftentimes takes a cut so they’ll take care dollar or their 1% out of the equation well.
The agent has expenses time, money, everything invested in getting your home soul. So a lot of that ends up going away and they kind of left with 1% and I’m just trying to share this with you too if you have a perspective on you know what the agents are getting paid when they get a commission they’re not keeping all that Commission.
There is no additional commission for the buyer’s brokerages only for the listing brokers to make the arrangement and through a cooperative arrangement. The Commission’s are split so something to understand about the real estate industry is it’s really a unique sales industry.
We are in a cooperative/competitive industry let me explain if I worked for example for a copier company as a salesperson for a copier company and I went to a big company XYZ and I’m sitting there and I’m working for copier company number one and then sitting next to me is copier company number two.
Only one of us is getting the deal only one of us is getting paid because we’re going to make a sale it’s either me or him and so and that’s it in a purely competitive environment.
So we have to in that situation or we’re sitting in and are thinking boy how can I make myself stand out better stronger more valuable than this person sitting next to me. Only one person wins in real estate it’s a little bit different though because yes while every agent is competing to get their own clients.
We still have to work with our competition because let’s say I take a listing. I put in the Multiple Listing Service. The reason why we offer a portion of the commission to the buyer’s agent is just that it’s statistically a buyer’s agent is going to bring the buyer to your house.
So if you understand what the job of the listing agent is it makes a whole lot more sense and the job of the listing agent is to market your house. Just because they have a listing doesn’t mean that they’re going to bring them by or a matter of fact it’s going to be a very infrequent that the listing agent actually produces the buyer as well just do some numbers with me.
Our local Association just our local Association but one that I belong to and there happens to be three different ones in Orange County California. There are somewhere in the neighborhood if I think about 16,000 active agents.
So now I as an agent let’s say I’m working with twenty you know prospective buyers at any given time. The odds of those 20 buyers being the ones who is interested in your house.
One out of two one out of only 20 people on the other hand if we assume that sixteen thousand people were active real estate agents each had 20 of their own buyers. Then and we offered to pay them yes if you bring one of your buyers will share that commission with them.
So now I’m exposed to the property just 32,000 potential buyers versus just the 20 that I have not very effective right. So anyways just want to help you understand a little bit about how the Real Estate Brokerage Commission’s fee work.