Real estate agents work with a real estate broker and all money that is paid to the real estate agent goes through the broker. The real estate broker is the only person who can pay a real estate commission. Real estate agents just starting out in the field get around 30 to 40 percent of the total commission that the brokerage receives. Other fees are taken from that amount that includes sign rentals and advertising costs. The best real estate agents could get 100% and then pay the broker a fee.
The listing agreement that is drawn up between the seller and his agent gives that agent's broker the right to put the home on the market for sale. The broker is the only person allowed to do this. The seller pays the broker a commission in return for finding a buyer. This fee is a percent of the price being asked for the home and it is split between the broker who finds the buyer and the broker who lists the home for sale.
The division of the fees is not always done fairly among brokers. It is not always a 50/50 deal. In the buyer's market a seller might want to think about asking the broker to give a big percentage to the broker on the buyer's side. In the seller's market, the broker on the side of the buyer might get less. There simply is no set standard.
When a broker is given the green light by a seller to put his property up for sale, the broker becomes the seller's agent. One of the most common terms in real estate is the commission that the agent is going to get for the services he provides. The listing agreement contains all of the terms of the contract.
The listing agreement is either verbal or written and it is a contract between the owner of the property and an agent. This agreement authorizes the agent to put the property up for sale. The listing agreement will contain the commission amount that will be paid and an expiration date.
If real estate buyers realized the power that they have the real estate world would turn on end. If the buyer paid the real estate commissions instead of the seller a whole new business model would be born with the buyer having the upper hand. What do you imagine the buyer would think about the agent lists the house getting the best price and terms for their client then? What would happen is that the agents on the buyers side would reduce fees paid to the listing agents.
