July 13, 2024


Mad about real estate

Who Pays The DFW Real Estate Commission

To understand who pays the DFW real estate commissions let’s look at how real estate agents are paid and how and why they share their commissions with other cooperating agents.  It can be a bit confusing so don’t be embarrassed if you don’t know how the commissions structures work. 

 How Real Estate Commissions Work

All real estate agents work under a real estate broker. All fees generated from a real estate transaction are paid to the broker and then the agent receives their portion of the commission through their broker.  Only the real estate broker can collect a real estate commission.

How Do Real Estate Agents Get Compensated by the Broker?

The split agents receive vary from transaction to transaction.  New agents can receive as little as 30{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} to 40{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} of the total commission received by the broker.  A more seasoned agent can receive form 50-70{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} of the total commission.  From that amount, other fees may be deducted such as advertising, sign rentals or office expenses. Top producing agents might receive 100{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} and pay the broke a flat desk fee.

Listing Agents’ Fees

The most typical type of listing agreement between a seller and an agent gives that agent’s broker the right to exclusively market the property. In return for finding a willing and able buyer, the seller agrees to pay a commission to the broker. Typically, this fee is represented as a percentage of the sales price and is shared between the listing broker and the selling broker.

Co-Broker Splits

The split of commissions between brokers is not always fair or equal. For example, a seller could sign a listing agreement for 6{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} that states that the listing broker will receive 4{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} and will pay 2{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} to the selling broker. It is not always a 50/50 arrangement. In a buyer’s market, a seller may want to ask the broker to give a larger percent of the commission to the buyer’s broker. On the other hand, in a seller’s market, the buyer’s broker might receive less. There is no standard arrangement.

Buyer’s Brokers

Seller Pays the Buyer’s Commission

Under a Buyer’s Broker agreement the named broker and agent represent the buyer’s interest. The commission paid to the broker is usually paid by the seller. Some buyer broker agreements will contain a clause that will compensate the broker for their commission due less the amount paid by the seller. For an example, a cooperating listing agreement may offer to pay a broker only 2{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} of the sales price, whereas the brokerage generally charges a commission of 3{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4}. The difference of could be paid by the buyer if the broker chooses not to waive that amount or the commission.

Buyer Pays the Commission

The seller is then not obligated, under most listing agreements, to pay the listing broker for more than the listing side of the commission. Many time sales prices will be reduced to reflect the amount the buyer is actually paying. Sellers can also give a credit to the buyer for the commission and the buyer will then credit the broker.

Who Really Pays the Commission?

It can be argued that the buyer pays the commission. Why? Because it is generally included in the sales price. If the seller did not sign an agreement to pay a commission to a DFW Realtor, the sales price may have been lower. On the other side of that thinking, it be argued that the seller pays the commission from the sale of DFW Real Estate because it is deduced from the sellers money at closing.  The reality of it is that both the buyer and seller are paying the commission.  The only way to avoid a commission is to sell your home as a Dallas FSBO (For Sale By Owner).  There is much  undue risk in buying or selling a home in this manner.  It is always better to retain the services of a professional DFW Realtor.