Do Real Estate Agents Get Paid If They Don’t Sell? Everything You Need To Know

One of the most common questions that homeowners have when they want to sell their property is: do real estate agents get paid if they don’t sell?

Do Buyers Pay Commission to Real Estate Agents?
Do Buyers Pay Commission to Real Estate Agents?| Opendoor

The answer is not as simple as it may seem, as different agents may have different fee structures and contracts.

In this article, we will explore some of the factors that affect how and when real estate agents get paid, and what happens if a house doesn’t sell.

READ MORE: Should I Become A Real Estate Agent? An Ultimate Guide

Commission vs. Flat Fee

The most popular way that real estate agents get paid is through a commission, which is a percentage of the final sale price of the home.

The commission rate can vary depending on the agent, the market, and the negotiation, but it is usually around 5% to 6% of the sale price.

This means that if a house sells for $300,000, the agent will receive $15,000 to $18,000 as their commission.

However, some agents may charge a flat fee instead of a commission, which is a set amount that covers their services regardless of the sale price.

The flat fee can range from a few hundred to a few thousand dollars, depending on the agent and the services they provide.

For example, an agent may charge $1,000 for a basic listing service, or $5,000 for a full-service package that includes marketing, staging, and negotiation.

The advantage of a commission-based fee is that it aligns the interests of the agent and the seller, as both parties want to sell the house for the highest possible price.

The disadvantage is that the seller may end up paying more than they expected if the house sells for more than the market value.

The advantage of a flat-fee structure is that it gives the seller more certainty and control over their expenses, as they know exactly how much they will pay the agent.

The disadvantage is that the agent may not have as much incentive to work hard to sell the house, as they will get paid the same amount regardless of the outcome.

No Sale, No Pay?

The general rule of thumb is that real estate agents only get paid if they successfully sell a house.

This means that if the house doesn’t sell, the agent doesn’t get paid.

However, there are some exceptions and variations to this rule, depending on the contract and the circumstances.

For example, some agents may ask for an advance on their commission, which is a portion of their expected fee that is paid upfront by the seller.

This is usually done to cover the costs of marketing and promoting the house, such as advertising, photography, and signage.

The advance is then deducted from the final commission when the house sells.

However, if the house doesn’t sell, the agent may still keep the advance as compensation for their work.

Another example is when the seller signs an exclusive listing agreement with the agent, which gives the agent the sole right to sell the house for a certain period of time.

If the seller finds a buyer on their own or through another agent during this period, they may still have to pay the original agent a commission, as they have breached the contract.

However, if the listing agreement expires without a sale, the seller is free to end the relationship with the agent and hire a new one, or sell the house by themselves.

Closing Costs and Other Expenses

Apart from the agent’s fee, there are other costs and expenses that the seller may have to pay when selling a house, such as closing costs, taxes, legal fees, and repairs.

These costs can vary depending on the location, the type of property, and the terms of the sale, but they can add up to several thousand dollars.

Closing costs are the fees and charges that are paid at the end of the transaction, when the title of the property is transferred from the seller to the buyer.

They typically include items such as appraisal fees, title insurance, escrow fees, recording fees, and transfer taxes.

Closing costs are usually split between the seller and the buyer, with each party paying 50% of the total amount.

However, this can be negotiated and changed depending on the market conditions and the seller’s motivation.

Other expenses that the seller may have to pay are taxes, legal fees, and repairs.

Taxes are the levies that are imposed by the government on the sale of the property, such as capital gains tax, property tax, and income tax.

Legal fees are the charges that are paid to a lawyer or a notary for preparing and reviewing the legal documents and contracts involved in the sale.

Repairs are the costs that are incurred to fix any defects or damages that are found in the house, either by the seller or by the buyer’s inspector.

These expenses are usually paid by the seller out of their own pocket, regardless of whether the house sells or not.

However, some of them may be deductible from the seller’s income tax, depending on the situation and the regulations.

Conclusion

Selling a house can be a complex and stressful process, especially when it comes to the financial aspects. It is important for sellers to understand how and when real estate agents get paid, and what happens if a house doesn’t sell.

Generally, agents only get paid if they sell a house, but there may be some exceptions and variations depending on the contract and the circumstances.

Additionally, sellers may have to pay other costs and expenses, such as closing costs, taxes, legal fees, and repairs, regardless of the outcome of the sale.

Therefore, sellers should do their research, read their contracts carefully, and consult with professionals before hiring an agent and listing their house.

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