While the number of stockbrokers and travel agents have declined in recent years, real estate agents still make up a huge share of the workforce. And despite the rumors that the internet is killing their business, real estate commissions are higher than ever — at least they were until a recent lawsuit forced the National Association of Realtors to revamp how they’re structured.
For decades, a standard real estate commission in the United States has been around 6% of the sales price of a property. The seller pays this fee, which is usually rolled into the purchase price of the property, to their broker who then splits it with the buyer’s agent. This arrangement can cost a seller tens of thousands of dollars in sales proceeds, and it’s something that many buyers aren’t even aware they’re paying for. Read more https://www.acompanythatbuyshouses.com/sell-my-house-fast-waco-tx/
But how much is that commission, exactly? We’ve put together this simple guide to help you understand how real estate commission works and how it affects the final sale price of your home.
When you buy or sell a home, the real estate agent you work with is paid through a commission. This is a percentage of the sale price that your agent is given by their broker to represent you as a buyer or seller. Typically, the amount of the commission is agreed upon in the listing agreement with your broker. The typical rate in New York City is 4%-6%, with a larger percentage being given to the selling agent.
The real estate agent’s broker then splits that commission with their salespeople based on how well they performed on the deal. A typical commission split is 60/40, but it can be 50/50, 70/30, or any other ratio that the agent and their broker agree to. It is also common for experienced and top-producing agents to receive a higher percentage of the total commission.
Lastly, the remaining commission is then taxed by the Internal Revenue Service (IRS). Since you’re an independent contractor and not an employee of your brokerage firm, you’ll need to file quarterly estimated taxes on the portion of the commission that isn’t rolled into the purchase price of the property.
For the most up-to-date real estate commission trends, check out our New York real estate calculator.
With this handy tool, you can easily calculate how much you will be earning as a new agent in NYC or anywhere else in the world. This will allow you to plan accordingly and determine the right course of action in your career. If you’re ready to get started, learn more about how to become a New York real estate agent! Getting licensed is the first step to becoming a successful agent in this lucrative industry.
Then, it’s time to start making some money!