The Truth About How Real Estate Agents Get Paid

I often get questions from my clients and members in the community about how real estate agents get paid. Because there seems to be a lack of understanding, I wanted to share some truth:

We are paid by the Seller
Once in a while, a Buyer will approach me and ask what I charge to represent him OR simply ask how I get paid. The truth is: real estate agents get paid from Sellers, not Buyers.
Through Seller representation, a Seller agrees to pay, usually a percentage of the sale, the agent who represents him (Seller’s Agent) AND the agent who provides the accepted offer (Buyer’s Agent).

We work for freeCash hundreds
We are a convenience driven society so unfortunately it isn’t terribly uncommon for a Buyer to use the services of whichever agent may be available when he needs one, but the truth is: real estate agents depend on client loyalty otherwise their efforts go unrewarded.

Agents continually provide services to Buyers and Sellers alike, but those services result in spent man hours; mileage expense; advertising costs; and office equipment, supplies, and services expense.

Seller’s Agents only get paid if the house is successfully sold during the course of the agent’s listing contract. Buyer’s Agents only get paid if the house is successfully sold as a result of that particular agent writing the offer. Smart real estate Agents strive to earn their client’s loyalty and to maintain a referral based business.

We’re not millionaires
How many times have you observed something in the newspaper celebrating a million dollar producer and thought “wow, she must be rich”! There’s a very common misconception in the public that real estate agents are actually millionaires (well, maybe a few are). The truth is- that particular accolade simply means that the agent has played a role in 1 million dollars in sales. When you investigate further, you will find that agents only take home a small percentage of the commission on the sale because the commission must be divided four ways between the Seller’s Agent and Broker and the Buyer’s Agent and Broker. In fact, the average real estate agent salary in Iowa is less than $38,000 (according to Salary.com January 2019).

If you’ve had a pleasant experience with a real estate agent, show your appreciation with loyalty and your real estate agent will thank you.