How Does a Realtor Get Paid?

This is understandably a common question that I get on a regular basis, “so how do you get paid?”.  This is especially common for first time home buyers who have not gone through the process before.  And thankfully most first time home buyers are thrilled with my answer that in most U.S. states it is the home seller that covers all of the realtor fees.  While I will delve into the process a bit more extensively below, what this really means is that especially for any first time home buyer there is absolutely no reason for them to find a highly recommended, experienced realtor to guide them through the sometimes tricky home buying process.  I think often times buyers avoid contacting a realtor at the beginning of their search for fear of accruing fees.

Another interesting thing to note is that a realtor does not get paid (not a single dime) until the closing.  This is great for you as the consumer because it ensures that your realtor will stick with you and guide you through the entire process, start to finish.  If for some reason the deal falls apart before the closing then the realtor makes zero money.  To actually follow the money this is the path that it takes…. 1.) The seller pays their listing agents brokerage at closing   2.) The listing agents brokerage pays the listing agent (often times brokerages keep up to 40% of the agents commission)   3.) The listing agent pays the buyers agent brokerage (it’s also common for both agents to split the earnings)   4.) The buyers agents brokerage then pays the buyers agent