Real Estate Broker...???

Question

Does a broker give some of his commission to anyone? Im not sure how the process works...the agent get 6% and splits it with the company, and then has to split the rest with the broker? What does a broker do and how do they make money??? Any info would help, Thanks!!!

Answer 1

This is the wayt that it works in our market. Keep in mind that it is different in every market.

The person who sells the house is charged 7% of the sales price. 50% goes to the listing agent and their broker and the remaining 50% goes to the selling agent and their broker.

The 2 brokers then have an arrangement with their agents as to how much each gets. For example (using simple numbers):

Sales Price: $100,000
Commission: $7,000
Sales Agent's Office gets $3500
Listing Agent's Office gets $3500

Sales Broker may get $1,750 and the agent $1,750

Listing office may get $1,000 and the agent $2,500.

It all depends on the arrangement each office has. The broker typically provides a desk, a phone a store front and a reputable name. That is why the broker gets paid even though it seems they aren't doing anything for you.

Answer 2

Not sure where you are located, but in most States, the earned commission on a closed sale is owned by the Broker (the Company the agent works for) and NOT the agent. Most customers don't realize this. They automatically think that the 4-6%^ commission is all going to the Agent. That is not usually true.

Depending on the Agent's contract with his or her Broker, the Agent may get all of the commission, or a percentage of it.

Some agents that get 100% of the commissions at closing, pay the Broker a monthly fee, so the more the agent sells, the more they keep.

Other agents get a smaller % of commissions, in which case there is normally a commission split.

Also, depending on the type of agreements made prior to sale, the commissions may be split between the buying Broker (and agent) and selling Broker (and agent) which means the pie is split into even smaller pieces.

Also remember that, in some cases , the agent, depending on the sales agreement with the seller (or buyer) may be paying a fee to advertise the property. They may also be paying for MLS access and other desk costs (depending on the contract with their employing Broker.)

The commissions, no matter how they are split, are used in part to offset these costs.

Hope this helps.

Answer 3

A lot of times, a broker and an agent are the same person. Generally, in a real estate transaction, there is:

a. A listing agent
b. A selling agent

The listing agent gets paid just to list the property (a variable amount). The selling agent gets paid 6% of the sale price, minus what their company gets in fees (typically, after everything but taxes, the selling agent gets about 3%).

Sometimes a "broker" is someone who sends a referral and gets paid a flat amount for submitting it. Say I contract with you that every time you see a particular kind of house for sale, I look into it and give you $500. You are kind of a broker. Although sometimes a broker takes a very hands-on approach, setting up the contract and such. People broker billion-dollar real estate deals. This is usually done, also, for a percentage, either cash now or partial ownership of the deal brokered.

Hope that helps.

Answer 4

A broker can own an office with agents working for him/her, or work for someone on commission.

The Brokerage firm actually receives the commission from the sale that an agent sells and closes.

At 6% comission on the sales, the Broker pays the agent 40-60 % of the 6%,=3% +- of the commission, depending on the agreement.

The Broker/Owner receives that amount from each and every sale. If an agent sells a property that is listed with a different Broker or that has been listed by another agent, in the same office, the agent commission is split with the other.

The broker/Owner earns 1/2 on every agent working for them.

Answer 5

No agent ever gets the full 6%. Neither does the broker.

Think of the 6% commission as a pie. Let's say the sales price of the house was $200,000. 6% of that is $12,000, yes?

So, 1/2 of the pie goes to the listing BROKER (not the agent) and 1/2 goes to the selling BROKER. That would be $6,000 to each side.

Then, the BROKER shares their piece of the pie with the agents involved. Most agents get 50-60% of that piece of pie, depending on your individual deal.

That means the selling agent might get $3,000 - minus your franchise fees, E&O insurance, and all of your related costs.

If you get lucky, you might be both the listing and the selling agent, and earn $6,000 minus expenses, but you will never get the full 6% commission on any deal.

And, fyi, your commission income is taxable by Uncle Sam.

The broker buys the Franchise (yes, these known companies are franchised - like Prudential, Century 21, ReMax, etc.), pays the franchise fees and shares of profit, pays the rent on the office, plus all office expenses (payroll and payroll taxes, utilities, furniture, office supplies, insurance), plus recruits, trains, evaluates and motivates his staff and agents, works on marketing the office and his agents, and does community service.

In return the broker gets to keep whatever $$$ is leftover after splitting with his/her agents, and paying the office bills.

So, ideally the broker has several good agents to keep the $$$ flowing in, and a good business plan to minimize office expenses.

I hope that helps.

Answer 6

We just bought a house...the broker hasn't done anything for us! She was lazy. Our realtor has done all the work. I dont' know what he has to split with everyone, but I'm sure the broker gets a big chunk out of it. I heard the realtor only gets 3%

Answer 7

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