Understanding How Real Estate Agents Get Paid: What Every Buyer and New Agent Should Know

Navigating the real estate market can feel overwhelming, but one thing is certain: having an experienced Realtor by your side is a game-changer. Whether you’re buying or selling, it’s essential to understand how real estate agents are compensated, so you can make informed decisions throughout the process.

The Role of Real Estate Agents: Independent Contractors

First things first: real estate agents are Independent Contractors. That means we’re self-employed, covering all of our business expenses, insurance, taxes, and even social security. We don’t get the typical perks like paid vacations, company cars, or expense accounts that employees often enjoy. Every marketing flyer, tank of gas, and insurance premium comes out of our own pockets. So, when we say we’re dedicated to helping you close the deal, we mean it – we don’t get paid until that happens!

How Commissions Work: A Quick Breakdown

Traditionally, the seller covers the real estate commission, which is a percentage of the home’s sale price. This commission is then split between the seller’s listing brokerage and the buyer’s brokerage. Each brokerage, in turn, divides that commission between their respective agents – the listing agent and the buyer’s agent.

But the real estate landscape is changing, and so is how buyer’s agents are compensated. Nowadays, sellers can either offer to pay the buyer’s agent directly or provide a credit to the buyer at closing, which the buyer can use to compensate their agent. In some cases, the buyer may need to pay their agent themselves.

What This Means for You as a Buyer

At my firm, we believe in transparency and fairness. Whether you choose a property listed by us or by another firm, our agents are paid the same. You’ll always receive the full support and expertise of your agent, regardless of where you find your dream home.

The Fiduciary Duty: We Work for You

As your agent, my primary responsibility is to represent you. Whether you’re buying or selling, I owe you my complete loyalty, confidentiality, and commitment to securing the best possible outcome. This fiduciary duty remains constant, no matter if I’m acting as your listing agent or your buyer’s agent.

A Day in the Life of a REALTOR: The Reality of Self-Employment

Being a real estate agent isn’t just about showing homes and closing deals. It’s a full-time commitment. We handle everything from marketing and advertising to managing showings and negotiations. And remember – we’re self-employed. Every expense, from professional photography to postage stamps, comes out of our own pocket.

So, while we may make it look easy, there’s a lot that goes on behind the scenes. And the bottom line? We only get paid when your deal closes.

Questions? Email Debbie

The 184 Things Realtors® Do

Pre-Listing Activities

1. Make appointment with seller for listing presentation

2. Send seller a written or e-mail confirmation of listing appointment and call to confirm

3. Review pre-appointment questions

4. Research all comparable currently listed properties

5. Research sales activity for past 18 months from MLS and public records databases

6. Research “Average Days on Market” for this property of this type, price range and location

7. Download and review property tax roll information

8. Prepare “Comparable Market Analysis” (CMA) to establish fair market value

9. Obtain copy of subdivision plat/complex lay-out

10. Research property’s ownership & deed type

11. Research property’s public record information for lot size & dimensions

12. Research and verify legal description

13. Research property’s land use coding and deed restrictions

14. Research property’s current use and zoning

15. Verify legal names of owner(s) in county’s public property records

16. Prepare listing presentation package with above materials

17. Perform exterior “Curb Appeal Assessment” of subject property

18. Compile and assemble formal file on property

19. Confirm current public schools and explain impact of schools on market value

20. Review listing appointment checklist to ensure all steps and actions have been completed

Listing Appointment Presentation

21. Give seller an overview of current market conditions and projections

22. Review agent’s and company’s credentials and accomplishments in the market

23. Present company’s profile and position or “niche” in the marketplace

24. Present CMA Results To Seller, including Comparables, Solds, Current Listings & Expireds

25. Offer pricing strategy based on professional judgment and interpretation of current market conditions

26. Discuss Goals With Seller To Market Effectively

27. Explain market power and benefits of Multiple Listing Service

28. Explain market power of web marketing, IDX and REALTOR.com

29. Explain the work the brokerage and agent do “behind the scenes” and agent’s availability on weekends

30. Explain agent’s role in taking calls to screen for qualified buyers and protect seller from curiosity seekers

31. Present and discuss strategic master marketing plan

32. Explain different agency relationships and determine seller’s preference

33. Review and explain all clauses in Listing Contract & Addendum and obtain seller’s signature Once Property is Under Listing Agreement

34. Review current title information

35. Measure overall and heated square footage

36. Measure interior room sizes

37. Confirm lot size via owner’s copy of certified survey, if available

38. Note any and all unrecorded property lines, agreements, easements

39. Obtain house plans, if applicable and available

40. Review house plans and make copy

41. Order plat map for retention in property’s listing file

42. Prepare showing instructions for buyers’ agents and agree on showing time window with seller

43. Obtain current mortgage loan(s) information: companies and & loan account numbers

44. Verify current loan information with lender(s)

45. Check assumability of loan(s) and any special requirements

46. Discuss possible buyer financing alternatives and options with seller

47. Review current appraisal if available

48. Identify Home Owner Association manager if applicable

49. Verify Home Owner Association Fees with manager – mandatory or optional and current annual fee

50. Order copy of Homeowner Association bylaws, if applicable

51. Research electricity availability and supplier’s name and phone number

52. Calculate average utility usage from last 12 months of bills

53. Research and verify city sewer/septic tank system

54. Water System: Calculate average water fees or rates from last 12 months of bills )

55. Well Water: Confirm well status, depth and output from Well Report

56. Natural Gas: Research/verify availability and supplier’s name and phone number

57. Verify security system, current term of service and whether owned or leased

58. Verify if seller has transferable Termite Bond

59. Ascertain need for lead-based paint disclosure

60. Prepare detailed list of property amenities and assess market impact

61. Prepare detailed list of property’s “Inclusions & Conveyances with Sale”

62. Compile list of completed repairs and maintenance items

63. Send “Vacancy Checklist” to seller if property is vacant

64. Explain benefits of Home Owner Warranty to seller

65. Assist sellers with completion and submission of Home Owner Warranty Application

66. When received, place Home Owner Warranty in property file for conveyance at time of sale

67. Have extra key made for lockbox

68. Verify if property has rental units involved. And if so:

69. * Make copies of all leases for retention in listing file

70. * Verify all rents & deposits

71. * Inform tenants of listing and discuss how showings will be handled

72. Arrange for installation of yard sign

73. Assist seller with completion of Seller’s Disclosure form

74. “New Listing Checklist” Completed

75. Review results of Curb Appeal Assessment with seller and provide suggestions to improve salability

76. Review results of Interior Décor Assessment and suggest changes to shorten time on market

77. Load listing into transaction management software program

Entering Property in Multiple Listing Service Database

78. Prepare MLS Profile Sheet — Agents is responsible for “quality control” and accuracy of listing data

79. Enter property data from Profile Sheet into MLS Listing Database

80. Proofread MLS database listing for accuracy – including proper placement in mapping function

81. Add property to company’s Active Listings list

82. Provide seller with signed copies of Listing Agreement and MLS Profile Sheet Data Form within 48 hours

83. Take additional photos for upload into MLS and use in flyers. Discuss efficacy of panoramic photography

Marketing The Listing

84. Create print and Internet ads with seller’s input

85. Coordinate showings with owners, tenants, and other Realtors®. Return all calls – weekends included

86. Install electronic lock box if authorized by owner. Program with agreed-upon showing time windows

87. Prepare mailing and contact list

88. Generate mail-merge letters to contact list

89. Order “Just Listed” labels & reports

90. Prepare flyers & feedback faxes

91. Review comparable MLS listings regularly to ensure property remains competitive in price, terms, conditions and availability

92. Prepare property marketing brochure for seller’s review

93. Arrange for printing or copying of supply of marketing brochures or fliers

94. Place marketing brochures in all company agent mail boxes

95. Upload listing to company and agent Internet site, if applicable

96. Mail Out “Just Listed” notice to all neighborhood residents

97. Advise Network Referral Program of listing

98. Provide marketing data to buyers coming through international relocation networks

99. Provide marketing data to buyers coming from referral network

100. Provide “Special Feature” cards for marketing, if applicable

101. Submit ads to company’s participating Internet real estate sites

102. Price changes conveyed promptly to all Internet groups

103. Reprint/supply brochures promptly as needed

104. Loan information reviewed and updated in MLS as required

105. Feedback e-mails/faxes sent to buyers’ agents after showings

106. Review weekly Market Study

107. Discuss feedback from showing agents with seller to determine if changes will accelerate the sale

108. Place regular weekly update calls to seller to discuss marketing & pricing

109. Promptly enter price changes in MLS listing database

The Offer and Contract

110. Receive and review all Offer to Purchase contracts submitted by buyers or buyers’ agents.

111. Evaluate offer(s) and prepare a “net sheet” on each for the owner for comparison purposes

112. Counsel seller on offers. Explain merits and weakness of each component of each offer

113. Contact buyers’ agents to review buyer’s qualifications and discuss offer

114. Fax/deliver Seller’s Disclosure to buyer’s agent or buyer upon request and prior to offer if possible

115. Confirm buyer is pre-qualified by calling Loan Officer

116. Obtain pre-qualification letter on buyer from Loan Officer

117. Negotiate all offers on seller’s behalf, setting time limit for loan approval and closing date

118. Prepare and convey any counteroffers, acceptance or amendments to buyer’s agent

119. Fax copies of contract and all addendums to closing attorney or title company

120. When Offer to Purchase Contract is accepted and signed by seller, deliver to buyer’s agent

121. Record and promptly deposit buyer’s earnest money in escrow account.

122. Disseminate “Under-Contract Showing Restrictions” as seller requests

123. Deliver copies of fully signed Offer to Purchase contract to seller

124. Fax/deliver copies of Offer to Purchase contract to Selling Agent

125. Fax copies of Offer to Purchase contract to lender

126. Provide copies of signed Offer to Purchase contract for office file

127. Advise seller in handling additional offers to purchase submitted between contract and closing

128. Change status in MLS to “Sale Pending”

129. Update transaction management program show “Sale Pending”

130. Review buyer’s credit report results — Advise seller of worst and best case scenarios

131. Provide credit report information to seller if property will be seller-financed

132. Assist buyer with obtaining financing, if applicable and follow-up as necessary

133. Coordinate with lender on Discount Points being locked in with dates

134. Deliver unrecorded property information to buyer

135. Order septic system inspection, if applicable

136. Receive and review septic system report and assess any possible impact on sale

137. Deliver copy of septic system inspection report lender & buyer

138. Deliver Well Flow Test Report copies to lender & buyer and property listing file

139. Verify termite inspection ordered

140. Verify mold inspection ordered, if required

Tracking the Loan Process

141. Confirm Verifications Of Deposit & Buyer’s Employment Have Been Returned

142. Follow Loan Processing Through To The Underwriter

143. Add lender and other vendors to your management program so agents, buyer and seller can track progress of sale

144. Contact lender weekly to ensure processing is on track

145. Relay final approval of buyer’s loan application to seller

Home Inspection

146. Coordinate buyer’s professional home inspection with seller

147. Review home inspector’s report

148. Enter completion into transaction management tracking software program

149. Explain seller’s responsibilities with respect to loan limits and interpret any clauses in the contract

150. Ensure seller’s compliance with Home Inspection Clause requirements

151. Recommend or assist seller with identifying and negotiating with trustworthy contractors to perform any required repairs

152. Negotiate payment and oversee completion of all required repairs on seller’s behalf, if needed

The Appraisal

153. Schedule Appraisal

154. Provide comparable sales used in market pricing to Appraiser

155. Follow-Up On Appraisal

156. Enter completion into transaction management program

157. Assist seller in questioning appraisal report if it seems too low

Closing Preparations and Duties

158. Contract Is Signed By All Parties

159. Coordinate closing process with buyer’s agent and lender

160. Update closing forms & files

161. Ensure all parties have all forms and information needed to close the sale

162. Select location where closing will be held

163. Confirm closing date and time and notify all parties

164. Assist in solving any title problems (boundary disputes, easements, etc) or in obtaining Death Certificates

165. Work with buyer’s agent in scheduling and conducting buyer’s Final Walk-Thru prior to closing

166. Research all tax, HOA, utility and other applicable prorations

167. Request final closing figures from closing agent (attorney or title company)

168. Receive & carefully review closing figures to ensure accuracy of preparation

169. Forward verified closing figures to buyer’s agent

170. Request copy of closing documents from closing agent

171. Confirm buyer and buyer’s agent have received title insurance commitment

172. Provide “Home Owners Warranty” for availability at closing

173. Reviews all closing documents carefully for errors

174. Forward closing documents to absentee seller as requested

175. Review documents with closing agent (attorney)

176. Provide earnest money deposit check from escrow account to closing agent

177. Coordinate this closing with seller’s next purchase and resolve any timing problems

178. Have a “no surprises” closing so that seller receives a net proceeds check at closing

179. Refer sellers to one of the best agents at their destination, if applicable

180. Change MLS status to Sold. Enter sale date, price, selling broker and agent’s ID numbers, etc.

181. Close out listing in your management program

Follow Up After Closing

182. Answer questions about filing claims with Home Owner Warranty company if requested

183. Attempt to clarify and resolve any conflicts about repairs if buyer is not satisfied

184. Respond to any follow-on calls and provide any additional information required from office files.

How Can I Help You?

The Buying Process—Your Step-by-Step Guide to Buying a Property with Debbie Maue

First Things First

• I will introduce myself, my qualifications, and the qualifications of my firm.
• I will Answer Any Questions You May Have Regarding Qualifications
• I will Review How I Represent You and My Responsibilities to you
• I will Discuss Your Responsibilities with Me
• I will Explain the Procedure of Choosing Properties and Setting Appointments
• Once we find the property you would like to purchase:

Time is of the essence……….The market is very strong……..

We will sit down and go over the contract and the terms we would like to include, such as:

• All personal property to be included
• Financing terms
• Closing date
• Attorney and inspection terms
• Completion of necessary riders (lead paint, property disclosure, etc.)
• Any other negotiable items
• We will review the comps and determine the offering price

When completed, you will sign the contract.

I will contact the listing broker that we have an offer.

• I will then meet or discuss over the phone the terms of this offer
• The seller and the listing broker will review the terms of the offer to determine if and what their counter will be
• The listing broker will contact me to negotiate their counteroffer- We may negotiate back and forth multiple times

Once everyone involved agrees on the terms of the offer:

• The contract is signed by the seller and all parties involved receive a copy.
• “Time is of the essence” – Receipt does not take place until we receive a copy, at which time, the “clock starts ticking”.
• Sellers and buyers contact their attorneys.
• Copies of the contract are forwarded to the attorneys for their review as outlined in the purchase contract.
• Copies of the contract are forwarded to the lenders and condo associations, when applicable.
• An inspection may or may not be performed upon your request (as outlined in the purchase contract). After which, any mechanical or structural defects of concern shall be negotiated with the seller to be remedied.
• Your lender/mortgage broker should be contacted to proceed with loan application as outlined in purchase agreement. Be sure to provide them with all necessary documents to complete your mortgage application.
• The listing agent coordinates any requirements by condo association, when applicable.
• You will provide, when applicable, to the condo association any additional documents, information, or funds.
• You will meet with the condo association, when applicable.
• The listing agent obtains a certificate of insurance for the condo, when applicable.
• I will provide your attorney with any additional documents they may request.
• As outlined in the purchase agreement, terms of attorney’s approval, property inspection, and mortgage requirements are met in a timely matter.
• 24-48 hours prior to close of escrow you will do a final walk-thru.
• Close of escrow takes place and moneys are distributed.

CONGRATULATIONS ON YOUR NEW HOME!!!!!!!

Note: Is important that all terms of the purchase agreement are met in a timely and responsible manner – or it may constitute a breach of contract.