How Do Real Estate Agents Get Paid?

People often ask me about how real estate agents make their money. The answer is a little more complicated than many might assume.

In short, agents receive a commission for each transaction they complete. Typically, sellers are expected to cover the commission fee for both agents involved: theirs and the buyer’s. This arrangement is contractually secured with a document called a listing agreement, which the seller signs to give their consent.

However, there are rare circumstances where buyers, instead, are responsible for the commission fee.

For example, if a seller doing a private sale neglects to pay their agent the promised commission at the end of the deal, the buyer assumes liability. The good news is that this scenario is rare, and, also, For Sale By Owner listings sell at an average of 7% below the general market average.

Buyers may also become liable for this expense if the commission is too low or if they sign a buyer’s representation contract with a seller’s agent they met at an open house.

With all this in mind, I’ve never seen any of these three scenarios actually occur during my 17 years working in the Maui real estate market. My team and I go to great lengths to educate and guide our clients.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.