REALTOR Fees And Pricing Practices

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Understanding the costs of a REALTOR® and any other associated charges before you begin the process of buying a home will greatly reduce the stress involved. It's up to you to discern if purchasing a home, with or without the help of a REALTOR®, is financially feasible for you at this time.

How Do REALTORS® Make Their Money?

REALTORS® earn money through commission only. Typically, the REALTOR® working for the seller will split the commission with the REALTOR® working for the buyer. How this is done varies, but sellers sign a listing contract with the agent's brokerage, so payment is typically made after a transaction closes and the brokerage receives the commission funds.

Some states allow a REALTOR® to represent both the buyer and the seller, but in other areas, this practice is illegal. If you want reassurance that your transaction will go smoothly, consider working with an Accredited Buyer's Representative® (ABR).

When renting properties, REALTORS® often get paid by the landlord looking to fill the apartment and not the tenant, but this varies as well.

How Much Money Do REALTORS® And Real Estate Agents Make?

Brokerage commissions depend on the location and type of the property, the property's value and the terms the agent and broker agree on. The average commission is 6 percent of the total sale value (HomeList, 2011), which is split between the REALTORS® involved. REALTORS® may also have to pay a portion of their commissions to their real estate company.

In 2008, median annual wages for real estate brokers, including commissions, were $57,500 (U.S. Bureau of Labor Statistics, 2011). Real estate agents' median annual wages in 2008 totaled $40,150.

A REALTOR®'s job is solely commission-based and her income is entirely dependent on the clients' purchase and sale of property.

Is A REALTOR® Worth The Cost Of Commission?

A REALTOR®'s value should be judged on a case-by-case basis. Since it can make your task--buying or selling--simpler and smoother, having a professional's help is a good safeguard. REALTORS® can offer invaluable experience and you may even get more money for your home or save money on a new home with their help.

After you complete the home purchase, you'll most likely be glad that you worked with a REALTOR®.

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