Sales Commission
Definition of "Sales commission"
Broadly speaking, a commission is a remuneration a person receives after acting on someone else’s behalf.
In the real estate world, you’ll usually hear the term “sales commission”, which is the remuneration a real estate broker and/or agent earns in regards for his/her service representing the home seller (or the home buyer) in a house buying/selling transaction.
Well… most of the times, at least.
Sorry if you’re looking for easy answers; the real estate market is complex - that’s why an agent expertise is something you should not turn your back to.
Sometimes agents do earn money regardless of a house being sold: Buyer’s agents, for instance, might earn a real estate sales commission even if the prospective home buyer doesn’t end up buying a house. Think about it: the buyer’s agent drove the client around showing houses on the weekend, shared his/her educated knowledge regarding the real estate market… that comes at a cost and it wouldn’t be right if the agent gets nothing out of it should the client decide it’s not the right time to buy a house.
And there are some times when the agent gets no real estate commission at all! Yup; even if the house is sold! If an agent entered an Open Listing or an Exclusive Agency Listing but did not manage to bring the final offer to the table, then the real estate commission will go to the agent who brought it or to the homeowner.
The standard real estate sales commission is 5% to 6% of the final sales price and the listing agent splits it evenly with the buyer’s agent.
Real Estate Tips:
Check our Glossary Terms for more real estate lingo!
And find an agent to help you with the complex task of buying or selling a house!
Popular Real Estate Terms
Agreement between the lessee and lessor specifying the lessee's rights to use the leased property for a given time at a specified rental payment. As rental payments are made, rent expense ...
Financial interest a developer has in a development. The interest may be a direct investment or a percentage interest in the overall profit. ...
Roof having four triangular sides forming a point at the top of a pyramid. A pyramid roof is primarily used for steeples on top of churches or certain public buildings. ...
Expected market value of property if sold today. ...
Limited partnership in which limited partners rely on the general partner to choose specific properties after the funds are available. ...
A map that shows land elevations. ...
Schedule which is part of Form 1040 showing income or loss from real estate transactions including net rental income (rental revenue less rental expenses). ...
Timeshare homes is the popular name given to the concept of fractional ownership in real estate, and, in fact, is a better term to explain its meaning.Why?Well, fractional ownership means ...
The amount of money a developer must directly invest in order to obtain a development loan. It pays for the initial development cost including costs for items such as architectural plans, ...
Have a question or comment?
We're here to help.