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How do real estate agent commissions work?

When working with traditional real estate professionals, the buyer and seller agent commission fees are paid out of the purchase price of the property.  In this scenario, real estate commissions typically range anywhere between 5% to 6% of a property's sale price. 

How Are Traditional Real Estate Agent Fees Paid?

Agent fees are deducted directly from the sale proceeds. Let's say a buyer and seller (each with a realtor) agreed on the sale price of the home at $500,000. In this scenario, the buyer and seller agent commission is set at 5%: 2.5% for each agent. The total commission will be $25,000 with $12,500 going to each agent.

Those commissions are deducted from the price of the home, not added to the sale price. So, while the buyer would pay $500,000, the seller would only receive $475,000 from the sale before closing costs. 

It should be noted, the buyer's commission fee can be as low as one dollar.  However, if the seller is only offering $1.00 commission, then fewer buyer agents will be interested in having prospective buyers tour the home.  For the most part, they work on a commission-only basis.

How is Everhome Different?

Everhome's Listed With Owner program offers a hybrid solution for FSBO sellers. By paying a low set fee, the seller is able to save thousands of dollars on commission fees that would normally go to a seller agent.

To compare, let's say the buyer and seller have agreed on the sale price of the home at $500,000. The buyer has a buyer's agent, who will still get a 2.5% commission of $12,500. However, the FSBO seller has representation in the transaction with a licensed Everhome agent, and pays a low set fee of $2,950.

By choosing Everhome — instead of a traditional real estate agent — the seller would receive $484,550 from the sale before closing costs. In this example, the seller makes $9,550 more on the sale.

You'll find more information about this topic in our blog article Real Estate Agent Commissions: What You Need to Know. If you have any questions, please call Everhome at (805) 379-3300 for a free consultation.