I was contacted by prospective buyers and sellers in the past that eventually asked how payment and commissions work. So I thought I’d give you the bottom line as to how downtown Boston real estate brokers/agents get paid.
Boston condo owners who list their properties are typically responsible for paying the commission to the brokers (e.g., the companies affiliated with each agent) who represent the seller and the buyer. The listing agent negotiates a commission up front, and this is included in the seller paperwork. Total commissions for both brokers usually four to five percent, and are typically divided equally. For example, a five percent commission on a $1,000,000 condo would find the seller paying $50,000 in commissions, with the brokers each receiving $25,000.
The Boston real estate broker (aka owner of the company) then pays the real estate agent according to whatever split is agreed to by both parties. Splits usually range from 50% to around 70%, and are based upon the skill of the agent. The more money the agent earns, the more favorable the split.
Boston Condo Sellers are not Responsible to Pay the Agent –
Home buyers aren’t directly responsible for paying real estate agents a fee. They obtain their fee from the broker they work for. An agent who represents a buyer doesn’t get paid until the buyer actually purchases the downtown condo.
It’s worth mentioning that real estate agents are never guaranteed a paycheck. There are times when sellers decide to withdraw a property from the market after their agent has been marketing the home for several weeks or months, and there are buyers who can house hunt and write offers for months or even years before they actually buy.
In the meantime, Boston real estate brokers and agents are responsible for covering their own cost of living (including medical insurance), as well as hundreds of dollars in association and transaction fees, marketing costs, and annual broker service fees/insurance. And oh, yeah—real estate guys have to pay taxes on our income (its a lot more than $700.00).