Real estate agents don’t receive a base salary. Instead, real estate agents earn money when they sell a real estate property, such as a house, and receive a commission for it.
The commission is a percentage of the property’s purchase price, which the seller pays for. Thus, the buyer isn’t responsible for paying either the buyer’s agent or the seller’s agent.
On average, a real estate agent commission is five to six percent of the purchase price. However, some agents are willing to negotiate with clients and offer a discount.
It’s essential to understand that the real estate commissions do not entirely go to the seller’s listing agent. Instead, the seller’s and buyer’s brokerages split the commission 50/50—afterward, the agent and broker divide it between themselves.
The split between the agent and the broker varies, such as 50/50, 60/40, or 30/70. The agent’s years of service or production can positively affect how much of the split they receive.
For a 5% commission, the commission upon a sale is $15,000 ($300,000 x 5%). The seller’s and buyer’s brokerages split the commission between them. Therefore, each brokerage receives $7,500 ($15,000 / 2).