Tag Archives: commission explanation

Real Estate Commissions – Some Basic Info

There are different contracts, but in many cases, the commission is paid by the seller to the broker. The broker then pays it to the agent. There are some people who have the false notion that the agent of the seller gets a lion’s share of the commission with a small cut being given to the buyer’s agent. If you look at facts, you will find that the commission is actually paid to the broker who in turn divides among other functionaries.

To explain this case, let us look at a scenario. Suppose a Mason OH house for sale is listed by Agent A for $100,000 which has a 6% commission for Broker A. now suppose a buyer is brought by Agent B to the house. The buyer loves the house and is willing to pay the full price of the house. For simplicity’s sake, the deal gets closed in the same month. As you can see, the buyer was pre-approved for $100,000 which means that Broker A is eligible for a check of 6% of $100,000 which works out to $6,000. If the contract reads that Broker A and Broker B would share the proceeds 50/50, Broker A and Broker B receive an amount of $3,000 each. Again, if there is 50/50 split between the brokers and their respective agents, then each broker and each agent gets $1,500 as per the respective contracts between the brokers and the agents.

While this is a basic and very simplified version, it is also possible that there could be splits in various percentages between the brokers and their agents. This is why you have to consider the split of the commission and while 6% of $100,000 is quite a neat sum of money, there is an entire team and support group working with your agent to sell your home.

The seller pays the agent’s commission, at least when dealing with Cincinnati real estate. This is why as a buyer, you should have your own agent. The knowledge agents bring to the table as well as being backed by large brokers that maintain standardized contracts and documents is a great advantage. All aspects are necessary to speed up the process and avoid future legal problems.