Buyers and Sellers states that approximately 6% of homeowners opted to sell their homes in 2023 without using a real estate agent or Realtor®. A handful of For Sale By Owner (FSBO) transactions dealt with sellers and buyers who previously knew each other or were directly related. Real estate agents and Realtors® — unlike professionals in different categories who bill by hourly rates or earn a salary — get paid through a transaction (commission) at the end of each sale. For example, if an agent has worked with a seller or a buyer for months, they don’t get paid for the time spent if there is no transaction during that period. Agents receive a commission once the transaction goes to settlement (closes) based on the home's selling price. At that point, the commission is earned. The commission is usually negotiated between the seller and the agent. Typically, an agent will earn a commission of 3.5% from the sale price, but some brokerages have commission discounts for the sellers with whom they work. Essentially, the listing agent and the buyer’s agent will split the commission. That can bring forth some issues. For example, sometimes the split might not be negotiated evenly. A seller could have agreed to pay a commission of 3.5%, of which the buyer’s agent would receive 1.15% while the listing agent receives 2.35%. Even though some agents are associate brokers, or in general, all commission payments are instructed to go through the broker managing the brokerage where the agent works. From there, the commission is then split between the agent and the broker, according to the agreement that’s been made. The split will vary;
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