How are real estate agents compensated when I sell my home?

Question 1

Kathleen Militello · Accepted Answer

In a typical sale, the commission is paid at closing out of the sale proceeds, and it is split between the listing agent's brokerage and the buyer's agent's brokerage. You see it as a line on your settlement statement, not a bill in the mail. The commission percentage is negotiated up front in your listing agreement and is usually a percentage of the sale price. It covers the entire service: pricing, marketing, showings, negotiation, and the work of getting to closing. Because it comes out of proceeds, you are not writing a separate check, but it does reduce your net, which is exactly why the net sheet matters and why you should understand what the commission buys. There are also flat-fee and discount structures available, and they can make sense for some sellers. What I will do is make sure you understand the trade-offs, because a cheaper fee does not always mean a better net. In Massachusetts, there are also newer rules about how buyer agent compensation is communicated, so a good listing agent handles that paperwork cleanly in every offer.

Question 2

What does the commission actually pay for?

Kathleen Militello · Accepted Answer

In a typical sale, the commission is paid at closing out of the sale proceeds, and it is split between the listing agent's brokerage and the buyer's agent's brokerage. You see it as a line on your settlement statement, not a bill in the mail. The commission percentage is negotiated up front in your listing agreement and is usually a percentage of the sale price. It covers the entire service: pricing, marketing, showings, negotiation, and the work of getting to closing. Because it comes out of proceeds, you are not writing a separate check, but it does reduce your net, which is exactly why the net sheet matters and why you should understand what the commission buys. There are also flat-fee and discount structures available, and they can make sense for some sellers. What I will do is make sure you understand the trade-offs, because a cheaper fee does not always mean a better net. In Massachusetts, there are also newer rules about how buyer agent compensation is communicated, so a good listing agent handles that paperwork cleanly in every offer.

How are real estate agents compensated when I sell my home?

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