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This is one of the most commonly asked questions in the real estate business. Buyer and sellers alike have a keen interest in agent commission. So what exactly is the commission and how is it determined? Like almost everything in real estate, the commission is negotiated. The seller(s) and the listing agent (the agent that will be responsible for helping the sellers sell their house) come to an agreement on what percentage of the dollar amount received for the sale of their home will be paid to the brokerages of the listing agent and buying agent.

For example; a 6% commission on a home sold for $100,000 would produce a $6,000 commission. For simplicity we will assume that the commission will be split evenly with 3%, or $3,000 going to each brokerage. The brokerages will then pay the agents all or a portion of the commission. The portion, or percent, that the agents receive varies based on each brokerage’s policies and procedures. A 50/50 split would result in the agent and the brokerage each receiving $1,500.

This is the fundamental definition of real estate commissions and a brief explanation of how it works. The commission, in my experience can also be used a tool. What do I mean by that? Well a tool is something that is used to assist in accomplishing a task, to make that task easier to perform, or provide increased results with the same or less amount of effort. How could a commission do this?

To figure that out let’s take a brief look at selling a house. Many of you reading this now have sold a home, are currently selling a home or may be considering selling in the future. The the main goal of th eagent is to get their clients home sold at a maximum price in the shortest amount of time. Paramount to accomplishing that is to get the a lot of people to view the home. A simple and time-tested way of doing that is by using the commission as one of their tools.

There are a few ways to utilize the commission to garner public interest and one way is to offer the buying side (buyer’s agent) an increased commission over the comptetion (similar houses for sale in your area). Great agents know this and many times will decrease their own commission while increasing the buyer’s side so that they can attract more buyers and serve their clients most effectively. Getting a client’s home sold in the shortest period of time and the maximum dollar amount are always top priority.

So the next time an agent asks for 6% commission or even higher; take into account they probably have your best interest in mind!

Thank you for reading my New Castle County Delaware Real Estate Blog!
Posted by Michael A. Brown of Keller Williams Realty, Christiana, DE.
302-798-2300