You’ve decided to sell your home but aren’t sure how it all works for a seller. After all your current home was your first home purchase. So you have a lot of questions, the least of which is how your Realtor gets paid.
I mean, who has hundreds of dollars laying around to pay an hourly fee to a professional? Relax, that’s not how this works.
Unlike many other kinds of professionals such as lawyers or accountants, Realtors do not bill their clients by the hour. They are paid when, and only when, your home sells. But what if the house sells, but the contract falls through? That happens all the time! Am I supposed to pay them then? And how do I know how much to pay them?
Again, relax, “when it sells” means they collect a check when the deed is signed and money changes hands.
So how do they get paid and how do we know what to pay them, you’re thinking
Well a Realtor works with you, the seller, for however long it takes to sell your home, or until the listing contract you have with them expires. If the home doesn’t sell, they aren’t paid for their time.
Realtors are paid a commission. This commission is based on the sales price of the home and the percentage of that sales price is spelled out in the listing agreement you have with them. The average commission percentage is 6%.
As the seller, you pay the commission
How that works is pretty simple. When you go to settlement to sign all those papers the lawyer or title company will know ahead of time what the percentage is for the commission.
They will prepare a statement that both buyer and seller sign. This statement has all of the financial information surrounding the sale on it: sales price, taxes due, money due from the buyer to the mortgage company, money due from the seller for fees, etc.
One of those line items is the Realtor’s commission. It is taken from the proceeds of sale and a check is cut right then for the Realtor. So technically no money directly out of your pocket, but paid from the lump you are getting at the settlement table.