The short answer is that Real Estate Agents get paid a commission when the deal is sealed; they get paid after a property transaction is complete. You will almost always hear this process being referred to as a closing.
A real estate transaction typically involves two different agents. Let’s look at the two types of Real Estate Agents and how each of them is paid.
1. One agent is the Listing Agent/Broker:
For property owners wanting to sell their home, a listing agent is the most essential. This agent will come into an agreement with a property owner to represent them in the sale of their property. The agent has several key responsibilities to the property owner which he/she must accomplish in order to effectively sell the property. The entire real estate commission is being compensated by the seller. Remember, a real estate transaction can be negotiated in numerous ways. This means that the buyer could even end up paying some or all of the sales commission.
2. The other agent will be the Buyer’s Agent, also referred to as the Selling Agent:
A buyer’s agent is required to call attention to the buyer, any flaws they realize or identify about involving the property. However, a buyer can request that the home have an inspection by a licensed home inspector. If it’s written in as part of the offer, seller will pay for the inspection. The agent writing up the offer will assist you with that. Also the seller can check with neighbors regarding the history of the home; sometimes certain things aren’t disclosed, but may be required bylaw. However, they are also paid by commission.
Commission fees vary from state to state and can fall anywhere from 5%-10% of the sale price. The agents may negotiate these fees which are shared between the two of them.
Now, I hope this gives you a better understanding of how your agent is paid when you’re buying or selling your home.