Real Estate Commissions – How They Work

Real estate commissions can vary from one commission issuer to another. The best way to go about getting a good understanding of real estate commissions is to first determine what the average commission rate is for your area and type of property you are interested in. The more information you have available about commissions before approaching a real estate agent, the more likely you will be able to negotiate the best rate and terms on your own. Understanding real estate commissions are important to agents who are looking to increase their own incomes and are teaching others in the business. It is also important to understand real estate commissions if you are looking to go to online real estate school to become a real estate agent or real estate broker.

How are Real Estate Commission Rates Decided?

Real estate commissions paid by real estate agents depend largely on the location and number of properties the sales agent is able to market. Some real estate agents charge a fixed percentage of the full sales price of each property they sell, while others list a property for a flat rate fee. Many real estate agents cooperate and share commissions with others. In turn, these same agents may charge a per-listing fee to the buyer or might charge a retainer or a cut of the commission to the buyer for joining the club.

Real Estate Commissions

How Much of the Real Estate Commissions are Taken by Real Estate Agents?

One thing that agents do not always inform their clients about real estate commissions is how much of it they will actually take. Many real estate agents have a cap on the amount they will take so they know exactly what they can and cannot charge. Some agents will offer their clients a set amount and tell them that they cannot go above that amount no matter what. Others will tell their clients that they cannot charge more than fifty percent of the commissions.

However, some real estate brokers do not want their real estate agents to be under contract to limit their earnings. If a real estate agent tries to charge more than the allowed rate then the broker may have issues with disciplinary action from his or her broker’s association. When the real estate agent tries to charge more the rates will never remain the same. It may increase or decrease from the time you first sign the contract until the time you complete the sale.

Real Estate Commissions are Beneficial For Both Agents & Homebuyers

A good real estate agent will always be open to working with their clients in any way that is beneficial to the client. Realtors that know what they are doing will not nickel and dime their clients but will truly try to make it happen. Most real estate agents will not go through real estate fees unless it benefits them. Some brokers may even charge their clients a small portion of the real estate fees just to get them to take the time to come to meet with them.

Real Estate Commissions

Ask Your Real Estate Agent About Real Estate Commissions

The only way that you can find out how your real estate agent makes their real estate fees is to ask. Many agents will not promise what they will not deliver and therefore you will never really know what you are getting unless you ask. Some agents do not even charge their clients for their time and they make sure that their clients are informed of everything that is happening so that they can make an informed decision on if they want to hire them or not. Always remember that real estate agents receive a portion of the real estate fees so they can not be under billed.


Understanding real estate commissions can take some time and research, especially if you are interested in real estate investing, but paying attention to the costs of working with a specific real estate brokerage can help. You may not know exactly how much you could save by switching to a different brokerage, or even saving money on your current real estate brokerage fees. It takes some time and patience to understand what the different rates and fees are for various real estate commissions and brokerages. Once you have gathered the information you need, simply negotiate with your current real estate brokerage to see if they can provide you with any better rates or additional services that might benefit you and save you a little money.