How Do Real Estate Teams Work?

Are you thinking about joining a real estate team or even building a real estate team to grow your business? You probably have a very important question: how does a real estate team work Real estate teams work by being

Audrey Lamb March 24, 2022

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Do You Have to Pay a Realtor if Your Home Does Not Sell?

More often than not, the answer is no. Real Estate is a performance-based business. Commissions on real estate are usually only paid when the job is done.

The typical real estate contract will have language stating that a real estate agent will only get paid if and when the property closes. Some contracts will have wording that you will owe the agency a real estate commission if a buyer is successfully procured and backs out of the contract.

It is essential to look over the fine print and know precisely what you agree to when signing a listing agreement. There are numerous occasions when sellers will want to fire their real estate agent for lack of performance. Getting out of a contract is not as easy as you think.

The same can be said if you hire a buyer’s agent and sign a buyer’s agency agreement.

Are Realtors overpaid?

The median income for Realtors was $51,220 in 2020, according to the U.S. Bureau of Labor Statistics. Median income represents the middle of the scale: Half of all Realtors made more, half made less.

Though home sellers may feel that Realtor fees of up to 6 percent are too high, Duffy argues that they’re not high enough. After all, a lot goes into listing a home, such as:

  • Performing a comparative market analysis to establish a competitive price
  • Arranging for photo shoots, sometimes including aerial shots via drone
  • Writing descriptive listing copy to attract interest from other Realtors and potential buyers
  • Providing staging guidance
  • Showing the property multiple times to prospective buyers
  • Hosting open houses on weekends
  • Providing yard signage
  • Making sure listings are populated on all major property search websites
  • Helping the seller review and negotiate buyer offers

When an offer comes in, the listing agent negotiates on behalf of the seller, often presenting one or more counteroffers. And with the volatility of the current market and record low levels of inventory, Realtors frequently deal with multiple potential buyers to help you get the most out of your property.

Average real estate commissions by state

Overall, the national average Realtor commission in 2021 was 5.5 percent, according to data from Clever. In most states, the commission ranged between 5 and 6 percent. But in states like California and New Hampshire, where expensive properties abound, the commission was typically under 5 percent. Find the average commission in your state in the table below:

State Average commission rate
SOURCE: Clever
Alabama 5.61%
Alaska 5.25%
Arizona 5.36%
Arkansas 5.91%
California 4.92%
Colorado 5.50%
Connecticut 5.41%
Delaware 5.75%
Florida 5.38%
Georgia 5.87%
Hawaii 5.25%
Idaho 5.55%
Illinois 5.21%
Indiana 5.87%
Iowa 5.90%
Kansas 6.00%
Kentucky 5.73%
Louisiana 5.19%
Maine 5.45%
Maryland 5.08%
Massachusetts 4.97%
Michigan 5.98%
Minnesota 5.68%
Mississippi 5.54%
Missouri 5.92%
Montana 5.50%
Nebraska 5.29%
Nevada 5.00%
New Hampshire 4.83%
New Jersey 5.18%
New Mexico 6.21%
New York 5.11%
North Carolina 5.45%
North Dakota 6.00%
Ohio 5.84%
Oklahoma 5.89%
Oregon 5.19%
Pennsylvania 5.60%
Rhode Island 5.15%
South Carolina 5.83%
South Dakota 5.00%
Tennessee 5.56%
Texas 5.78%
Utah 5.17%
Vermont 6.00%
Virginia 5.15%
Washington 5.17%
West Virginia 5.54%
Wisconsin 5.93%
Wyoming 5.48%

Are 3% commission realtors worth it?

Most home sellers should hire an experienced, full-service real estate agent. This gives you the best chance of finding a buyer quickly and selling your home for top dollar.

In the past, that meant working with a 3% commission realtor. But these days, you can find top-rated real estate agents who charge a lot less than the industry standard.

That could mean selling with a low commission company like Clever Real Estate or negotiating a discounted rate with an agent yourself. The bottom line is that there are more ways than ever to save thousands on realtor fees.

It’s a good idea to shop around and compare your options to pick the best agent for your needs and budget. Consider factors such as service quality and experience along with rates when choosing an agent.

💰 Never pay the full 6% commission again

The “standard” 6% commission predates the internet, when realtors had to work harder to find clients and potential buyers.

At Clever, we connect top-rated real estate agents with sellers like you at zero upfront cost to the agents — so they’re willing to pass savings along to you.

You’ll get full-service support for pre-negotiated listing fees of just 1% or $3,000, saving you thousands!

👋 Next Steps: Talk to an expert!

If you’re weighing your options for buying or selling a house, Clever can help!Our fully-licensed concierge team is standing by to answer questions and provide free, objective advice on getting the best outcome with your sale or purchase.Ready to get started?Give us a call at 1-833-2-CLEVER or enter your info below. Our concierge team will be in touch shortly to help.Remember, this service is 100% free and there’s never any obligation.

How Much Do Real Estate Agents Make?

The median annual pay for real estate agents was $48,930 in 2019, according to the most recent data available from the U.S Bureau of Labor Statistics. For brokers, the figure was $59,720.

Of course, real estate agents and brokers can make much more than that. The highest 10% of agents earned more than $111,800 in 2019, while the top 10% of brokers made upward of $178,720.

For Sale By Owner

For sale by owner (FSBO) listings are one way to reduce the overall commission paid in a real estate transaction. Though, the seller will be responsible for the listing agents responsibilities. This includes photographing and marketing the property to potential buyers. Sellers will also need to negotiate with buyer’s agents and navigate the closing process alone.

If you have experience in the real estate industry, this may seem like a simple enough task. However, a lot goes into marketing a property and you could sacrifice the best price by attempting to handle the job alone. It is also important to know that the transaction will still have a buyer’s commission, so FSBO properties will not avoid these costs entirely. That being said, some owners find this to be the best method. Consider your options and learn more about FSBO properties before attempting to list a property yourself.

Can You Lower the Real Estate Agents Commission?

Buyers and sellers will always be wary about paying so much in commissions, particularly on more lucrative sales. Once they find out how much realtors make, they’re thinking of ways to get the number lower.

Luckily for them, there are no federally regulated standards in terms of a real estate agent’s commission fees, so this commission is technically negotiable. You can bargain with your agent for a lower price. 

If you’re a home seller that's looking for realtors with lower commissions, there’s something called “transactional agreements” that you should consider.

This means that for a flat fee instead of that 5-6% commission, your realtor will help you set up your pricing, meet and showing the property to buyers, and help you with contracts, but they won’t always give you their full services. You'll also likely have to pay a non-refundable marketing fee up-front to cover their expenses. 

If you need a real estate agent but can’t afford the full package, a transactional agreement can help you lower the burden of hiring one while still getting some of their basic services. Just remember that not every agent accepts these agreements.

If you're a home buyer you're not technically paying the buyers agent fee so you might not think you have a lot of negotiating power, but that's not necessarily true. In many states, you can negotiate a buyer commission rebate, where the buyer effectively gives you a portion of their commission. 

Things to Keep in Mind About Realtor Fees

All aspects of a realtor’s commission and fees should be decided before you buy or sell the house. You should have signed a contract when you hired the agent that specified their commission and who will pay it. This means that you can’t wait until you’ve found a house to haggle this amount: this is something you have to make up your mind about well in advance.

Another thing to keep in mind is that rules of commissions can vary between states, particularly between different kinds of agents, such as rental agents. You need to research relevant state requirements if you have a concern about this aspect of your transaction.

You should also realize that everything in this guide pertains only to selling a property with a house on it. Other kinds of purchases could be subject to different rules. Selling or buying a vacant lot, for instance, entails a much large commission – sometimes, as high as 20% of the sale. This is because selling vacant land takes much more of a real estate agent’s time and requires even more marketing than a house.

What Commission Covers

If a cool 3 percent per home sale has you thinking of a career change, think again. Real estate agents don’t get to keep all that money. Agents typically work through a broker. The broker is the company whose name appears on the for sale sign in the yard. Brokers also pay the MLS listing fees, advertising costs and other expenses associated with selling homes. Commissions are typically split between the agent and the broker, and the percentage of the split varies. For example, new agents at a particular brokerage might get to keep less than half of the commission money they earn, while veteran agents who bring in a lot of business might get to keep three-quarters of it.

How Much Realtors Make FAQs

How Are Real Estate Fees Paid?

Real estate commissions are deducted directly from the sale proceeds at closing. The amount is then paid directly to real estate brokerage firms, which split them with the agents involved.

Do Real Estate Agents Get Paid a Base Salary?

Most real estate agents are paid on a commission-only basis. But certain agents—including those who are employed by companies like Redfin—get a base salary plus bonuses.

Are You Supposed to Pay Your Real Estate Agent?

Consumers don't pay real estate agents directly. Brokers receive the commission, which is taken from the total proceeds of the sale. This amount is then split between the agency and the agent.

Do Real Estate Agents Get Paid Weekly?

Real estate agents do not get paid weekly. Instead, they work for commissions on the sales they make. These commissions are split between the agency and the agent and are paid following closings.

What Percentage Do Most Real Estate Agents Charge?

Real estate commissions typically range anywhere between 4% and 6% of a property's sale price. This amount is further divided between the agency and the agent who worked on the sale.

How Can You Increase Your Real Estate Commission?

In the real estate business, a real estate agent is in ultimate control of how much they make. A real estate agent can increase their real estate agent commission in a few ways:

  • Being both the buyer’s and seller’s agent. If you list a property and then find a buyer for it, you get the full commission, rather than having to split it with the other agent. This is called dual agency.
  • Negotiating better rates with your broker. You might need to go to another broker if your current one is too expensive or if it’s just not a good fit.
  • Negotiating a higher sale price for your listings. As a seller’s agent, it’s in your interest to make sure your sellers get the best price for their house, every time.
  • Selling more houses. Real estate is very much a numbers game. If you can’t increase each individual commission, you can increase your total real estate commission by selling more properties.
  • Getting into bigger markets. Waterfront properties and luxury properties are naturally going to make more money for a Realtor, though they may be more of a challenge to sell.
  • Providing additional services. A real estate agent can provide services such as home staging for their listings, as well as sell packages such as superior photography and videos.

Your actual commission rate isn’t likely to waiver from 4% to 6% total. The ceiling is going to be set by the area you’re in, even with negotiations. But the amount that you, as a Realtor, make in commission is somewhat under your control because you can always do more.

FAQs on Real Estate Commissions

The following are some of the most asked questions about Realtor’s fees.

1. How do Real Estate agents get paid?

As you have learned, real estate agents get paid by receiving a commission based on the sales price. Real Estate agents do not get paid hourly.

2. How much do real estate agents make?

A real estate agent’s income will depend on how many sales they make in a given year, along with the total of their expenses.

3. What commission percentage do most Realtors charge?

The most common real estate commission across the country is 6 percent of the sales price. Realtor commissions are calculated by multiplying the sales price by the agreed-upon commission percentage. In most parts of the country, a fair commission is somewhere between 5 and 6 percent of the home’s sales price.

4. What is the commission split in real estate sales?

The most common commission split on real estate is by far 50/50. If you deviate from that, it will be looked upon very unfavorably in many places.

5. How do I ask a Realtor to lower their commission?

One of the best ways to get agent fees lowered is when you will be buying and selling simultaneously. If you ask the agent to discount their commission if buying and selling with you, they will often agree to a commission reduction.

Frankly, if an agent disagrees, you would be better off hiring someone else.

6. Are commissions on real estate negotiable?

Yes. Real Estate commission rates are negotiable. Some agents, however, may not budge from what they charge for a fee. The Realtor commission rate can vary from agent to agent and company to company. It is a good idea to interview multiple real estate agents.

7. What other fees do I have besides a real estate commission when selling my home?

You can see all of the closing costs for a seller in this home selling expenses guide.

8. What does a 70/30 commission split mean?

Commissions on real estate are split between a real estate agent and the company’s owner. The agent gets 70 percent of the total commission in this scenario, and the real estate broker gets 30 percent.

The commissions split between agents and brokers will vary from company to company.

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