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A real estate commission is a portion of the purchase price of a property given to the real estate agents and brokers that made buying and selling a property possible. Real estate agents often earn their income via commissions. This means they are only paid once a home sells. After the sale, the entire real estate commission is typically shared between the listing agent (or seller’s agent), the buyer’s agent, and their respective brokers. State-to-state and agent-to-agent variations exist in the commission percentage. With the proceeds from the property sale, which are often accounted for in the home’s selling price, homeowners are generally responsible for paying the real estate commission rate.

The terms real estate agent, realtor, and broker are all phrases that might be used interchangeably but have different meanings. While brokers and agents have distinct licensing requirements, both may become real estate professionals by joining the National Association of Realtors. To advance the real estate industry and encourage professional conduct among its members, real estate brokers nationwide have formed the National Association of Realtors (NAR). The group has a set of conduct standards that all its members must abide by. The NAR has more than 1 million members globally as of 2021. More than 1,600 national and international affiliate organizations.

The roles of the listing agent and the buyer’s agent are unique. Staging, marketing, organizing open houses, and putting the property on a multiple listing service (MLS) are all responsibilities of the listing agent, who represents the property’s seller. Typically, the buyer’s agent would investigate potential houses, schedule inspections, work with real estate attorneys, and haggle over the price of the home.

The location of the sale and the agents’ or brokers’ commission rates affect the average percentage rate of a real estate agent’s commission. While commission fees are continuously adjustable, most real estate sales commissions range from 4% to 6% of the sale price. For instance, if the commission is 6% and each agent splits the money equally with their broker, each broker and agent would get 1% of the property’s sales price. Brokers may give agents a smaller share of the sales commission as compensation for their efforts, but they always take a portion of the commission to cover marketing expenses.

While the real estate commission is typically the seller’s responsibility, it’s common for property sellers to include the commission charge in the home’s ultimate selling price, making the home buyer indirectly liable for the cost. All closing expenses, appraisals, and other fees associated with the sale of the property are also the responsibility of the house buyer.