The Seller's Agent
The seller's agent is hired by the owners of the property being listed. Their primary task is to represent the BEST interest of the client. Being a REALTOR® I have to abide by the National Association of Realtor's Code of Ethics and Standards (Found Here). Under Article 1 it states:
When representing a buyer, seller, landlord, tenant, or other client as
an agent, REALTORS® pledge themselves to protect and promote the
interests of their client. This obligation to the client is primary, but
it does not relieve REALTORS® of their obligation to treat all parties
honestly. When serving a buyer, seller, landlord, tenant or other party
in a non-agency capacity, REALTORS® remain obligated to treat all
parties honestly.
I take these code of ethics very seriously because I expect to be treated the same way if I was in my client's shoes. I only provide my opinion when it serves the best interest of my clients and not me. At the end of the day, I am not the one who is selling or obtaining a new property, meaning, I don't have to live with that choice like my client does. I want to make sure their needs are met because that is what I was hired to do.
A sellers agent handles many tasks that include: helping to analyze the market to find the BEST time to sell, advising on how to maximize the property's value, connecting sellers to other professionals to prepare the home for sale, staging the home, taking pictures of the home, listing the home on multiple listing service (which is only available through real estate agents), helping with properly pricing the home, marketing the home (tours and open houses), serving as the go-between in negotiations with the buyer and drawing up a purchase agreement.
Statistics show that on average homes listed with an agent sell for a higher price (NAR Research Report) and if the old saying is true that time equals money, they also save you a ton of time.
How are agents paid?
When a property is put on the market, the seller and the listing broker sign a listing agreement, which is a contract detailing the terms of the listing, including the broker's compensation—usually a commission. It's important to note that the commission is always negotiable. In fact, it is a violation of federal antitrust law for members of the real estate profession to attempt, however subtly, to impose uniform commission rates.
Commissions generally range between 5% and 6% of the final sale price, though they may be higher or lower based on market conditions. Unless the buyer and seller negotiate a split, it is the seller who pays the commission. Most sellers factor the commission into the asking price, so it could be argued that the buyer always pays at least part of the commission, either directly or indirectly (through a higher purchase price).
Both the seller's agent and the buyer's agent have agreements with their sponsoring brokers that specify the agent's cut of the commission. It can be a 50/50 split between the broker and the agent or any other split they choose.
Example of a Real Estate Commission
Here's an example of how a real estate agent is paid a percentage ofthe commission that the listing broker earns on the transaction.
Say an agent takes a listing on a $200,000 house at a commission rate of 6%. This equals a total commission of $12,000. If the house sells for the asking price, the listing broker and the buyer's agent's broker each get 50% of the commission, or $6,000 each ($200,000 sales price x 0.06 commission ÷ 2). The brokers then split their commissions with their agents.
In a 60/40 split, each agent in our example receives $3,600 ($6,000 X n0.6) and each broker keeps $2,400 ($6,000 X 0.4). The final commission breakdown would be:
- Listing agent: $3,600
- Listing broker: $2,400
- Buyer's agent: $3,600
- Buyer's agent's broker: $2,400
Bottom line, agents don't get paid until the sale is final.
Agents spend many hours of doing work and sometimes, never get paid. If a seller never sells their home, then the agent has earned nothing at the end of the day, other than some valuable experience. This is the world of being a REALTOR® and that's OK with me. Not everything is within our control and sometimes things just don't work out. But the experience and the people you meet, make it all worth wild.
