Where Does an Agent's Commission Really Go?

There is a huge misconception on real estate agents pretty much everywhere.

Yes, there are big commissions to be made in real estate, but they are not always as big as you may think.

One of the biggest misconceptions that people have is that using a real estate agent is expensive. In reality, real estate agents are FREE for buyers and tenants. So, if you are looking to buy or lease a property, you have zero expenses to working with an agent. You are getting industry knowledge and access to properties at no charge.

Sellers and Landlords are the only parties who pay commission in transactions. An agent only gets paid when the deal is closed.

So, the big question is where does the real estate agent's commission really go?

In Florida, the standard real estate commission is 6%. Let's say you are selling a one million dollar property, then your commission would be $60,000, but that is not always the case. There are 4 categories of where that $60,000 is broken down.

1. In most cases, there is another agent involved in the transaction. So the $60,000 you thought you were making just got split in half and you now have $30,000. 
2. Are you really left with $30,000 to pocket at the closing table? Not quite. Taxes are real and about half of your commission is going in this category. 
3. Marketing a property costs thousands of dollars. From photography and videoraphy, installing signs, marketing platforms, hosting brokers opens and open houses, staging, digital exposure, property printouts, and all the other costs in between add up quickly. All of the marketing and promotions are done at the listing agents expense. Real estate agents are marketers and this is typically the largest expense when being an agent. 
4. After the first three points are checked off, the remaining is what the agent has to live.

Almost 90% of sellers who had their properties for sale by owner (FSBO), ended up using a real estate agent during the process. Additionally, 89% of buyers purchase their properties with a real estate agent. The statistics don't lie!

If you are ever wondering with whether to work with an agent or not, your answer should always be yes. Professional agents help save you both time and money.