The compensation structure for real estate agents can vary, especially with recent regulatory changes that offer more flexibility and transparency. Agents are required to disclose their compensation arrangements clearly in the buyer agreement. This ensures that you, as a buyer, understand exactly how your agent will be compensated and can make informed decisions.
Possible Compensation Structures
Recent regulations now allow for more varied compensation structures. Buyers will need to be proactive in understanding the costs associated with their agent's services, and may need to factor these costs into their overall budget for purchasing a home. Here are some of the ways a buyer’s agent can be compensated: 1. Split Commission Model: Starting August 17, 2024, commission information will no longer be communicated via the MLS (Multiple Listing Service). Compensation agreements based on commission must now occur off-MLS through negotiation and consultation between real estate professionals. These agreements may still follow the traditional split commission model, where real estate agents are paid a commission based on the final sale price of the home. This commission is typically a percentage agreed upon between the seller and the listing agent. If using this payment model, the buyer's agent would receive a portion of the commission, as arranged between the listing agent and the buyer's agent. Typically, all commission payments go through the broker managing the brokerage where the agent works. From there, the commission is split between the broker and the agent according to their internal agreement. 2. Direct Payment from the Buyer: The buyer may agree to pay their agent directly. This can be a flat fee, an hourly rate, or a percentage of the purchase price.
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