Most real estate brokers commonly take around 40% of the commission earned from a real estate transaction after the total commission is paid by the seller. This percentage refers to the portion of the agent's commission that the broker retains, not the total commission from the sale.
Understanding Real Estate Commission Splits
When a property is sold, the seller typically pays a total commission, which is often around 5% to 6% of the sale price. This total commission is then usually split between the listing broker (who represents the seller) and the buyer's broker (who represents the buyer). Each of these brokerage firms then splits their share of the commission with the individual real estate agent who handled the transaction.
Common Commission Structures
The percentage a broker takes primarily refers to their share of the commission paid to their brokerage by the agent they oversee. While a 60/40 split (60% to the agent, 40% to the broker) is a common arrangement, the actual percentages can vary significantly based on an agreement between the agent and the broker.
Here are some typical agent-broker commission split scenarios:
| Agent's Share | Broker's Share | Description |
|---|---|---|
| 50% | 50% | An even split, common for new agents or full-service brokerages. |
| 60% | 40% | A common arrangement, with the agent receiving a larger share. |
| 70% | 30% | Often offered to more experienced or high-producing agents. |
| 80% or higher | 20% or lower | Reserved for top-tier agents or those in brokerage models with fewer services. |
These splits are determined by a variety of factors and are generally negotiated at the time an agent joins a brokerage.
Factors Influencing Broker Commission Percentages
The percentage a broker takes is not fixed and can be influenced by several elements:
- Agent Experience and Production: More experienced and top-producing real estate agents often command higher commission splits, meaning the broker takes a smaller percentage. Their proven ability to generate sales gives them more negotiation power.
- Brokerage Model: Different brokerages operate on various models.
- Traditional Brokerages: May offer lower splits but provide extensive training, office space, administrative support, and marketing resources.
- Discount or Boutique Brokerages: Might offer higher splits (e.g., 80/20 or even 100% with a flat fee) but provide fewer services, requiring agents to be more self-sufficient.
- Market Conditions: In highly competitive markets, brokerages might offer more attractive splits to recruit and retain talented agents.
- Agent-Broker Agreement: Ultimately, the commission split is a contractual agreement between the agent and their supervising broker. This agreement can sometimes be renegotiated as an agent's career progresses.
How Broker Commissions Impact Agents
The commission split directly impacts a real estate agent's net income. While a higher split for the agent means more money per transaction, agents must also consider the value proposition of their brokerage, including the support, resources, and branding it provides. A lower split might be worthwhile if the brokerage offers invaluable training or leads that help the agent close more deals.
Understanding these dynamics is crucial for both aspiring and experienced real estate professionals. For more detailed information on how real estate agents get paid, you can refer to resources like Investopedia.
