How Do Realtors Get Paid?

July 23rd, 2008 categories: Miscellaneous, Prudential California Realty

Like most people, before I got into real estate, I had no clue how Realtors made a living. Sure, they sell homes, but how do they actually make money? The answer to that, these days especially, is that we work hard.

Residential real estate agents only get paid when they sell a house. Not when we list a house and not when we show you property – only when we close a deal and a home exchanges buyers’ hands. We are independent contractors and are not considered to be employees. This means that we get no medical benefits, nor do we get our employer to match our 401Ks. We, Realtors, essentially run our own businesses and are responsible for our own survival. There are no salaries, no expense accounts and no bonuses. We only get paid when we close a deal – 100% commission.

To break it down further, most brokerages work one of two ways:

Option 1 – Agents pay the company a “desk fee,” which is like rent. Agents pay an annual fee to be a part of that brokerage and use their office space. These arrangements typically yield a higher commission split between the agent and the broker, but the agent pays his or her rent no matter what.

Option 2 – Agents do not pay a desk fee, but give a higher percentage of their commissions to the broker. In other words, you don’t have to pay for your desk, but you do give the office a portion of your money each and every time you sell something.

Obviously, it depends on how much business each agent does and what their split is, to determine which option is more beneficial to that particular agent. However, aside from commissions, there are other factors as to why an agent may work for a specific brokerage. I for one, chose to work for Prudential California Realty, because we are by far the largest real estate company in San Diego. Prudential has an great reputation and a great team of leaders running the company.

With that said, not every agent within Prudential is the same. Like any service industry, you should do your homework and work with someone who knows what they’re doing and someone you like.

If you have any other questions, or know of someone who might need some help, feel free to contact me.

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