Who gets all that commission anyway?

Not me. Don’t get me wrong, I get some of it, but not nearly as much as you might think.

Are you thinking of selling your house and you just can’t get past the amount of money that you’ll have to pay a Realtor to do it? Without getting on my soapbox about the value of a Realtor and why it really is foolish not to hire one, I’d like to share with you why sometimes being in the real estate business really is a noble cause.

Here’s how that 6-7% of your selling price breaks down. These numbers are just commission, mind you, and do not reflect all the closing costs of title companies, attorneys, local and state governments (taxes and such), or any of the other fees and charges associated with closing on your home. We’re only talking about the commission. That money typically gets split four ways:

1) the listing Realtor

2) the listing Realtor’s broker

3) the selling Realtor

4) yep, you guessed it, the selling Realtor’s broker

Now, all parts are not exactly divided equally here either. So, for simple numbers, lets say I sell your home for $200,000 and charge a 6% commission and I say that I will split the commission with the selling Realtor for 3%.

$200,000      Sales Price       x      6%  Total Commission     =      $12,000

Now divide that in half between the Realtors. I get $6,000 and the selling Realtor gets $6,000.  But we forgot the brokers. Their take comes right off the top before I ever get to see a check with my name on it. Most brokers will take anywhere from 25-50% of the commission, based on the Realtors experience and profit share of the total business the office does. So we’ll say that both the listing broker and the selling broker are taking half, since this is pretty typical unless you are the office rock star and we won’t get into that as their businesses are managed very differently than the typical Realtor. So now my check is $3,000.

But wait, there’s more. Now uncle Sam want’s his part, so lets take another third off and I’m down to $2,000. And then there’s the office fees, the licensing fees, the professional memberships (National Association of Realtors, State Associations and Local Associations), continuing education that is required and the gas to get us where we need to go.

After all that, then we get to feed our family and pay the bills.

Published in: on October 15, 2009 at 5:40 pm  Leave a Comment  
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