If you’re contemplating buying or selling a home in Birmingham, you might be curious about the ways in which real estate agents earn their income. This article aims to clarify how they generate revenue, provide insight into their earnings potential, and help you decide whether working as an agent or a broker is more advantageous.

Aside from finding a real estate agent, you may also be looking for a title company in Birmingham. Clarion Title provides title search services to help you reach the closing table successfully.

How do Real Estate Agents Make Money?

Real estate agents primarily receive payment through commissions, which are based on a percentage of the final sale price of a property and paid by the seller. Therefore, they only earn income when they successfully facilitate a real estate transaction.

Moreover, real estate agents can also receive referral fees from third-party service providers such as home inspectors or mortgage lenders if they refer their clients to them.

How Commissions Work for Real Estate Agents:

The commission for a real estate transaction is typically a percentage of the home’s final sale price, and it’s divided between the buyer’s and seller’s agents. While the standard commission is around 6%, it can vary depending on the market and the agents involved. The commission is divided into four parts if brokers are also part of the transaction.

The payment of the commission occurs after the sale is finalized and the necessary paperwork is complete. The real estate agent will usually receive their payment within 30 days. It’s important to note that commissions are only paid when a sale closes, not if a listing doesn’t close.

Based on data from Indeed.com, real estate agents earned between $85,597 to $112,309 in 2022.

Real Estate Agents vs. Real Estate Brokers

Real estate agents may expand their income by becoming real estate brokers, who significantly facilitate property sales. Brokers earn a commission that is split among all the agents and brokers involved in the transaction, and sometimes, they may charge a flat fee for their services.

When a property is listed for sale, the seller and the listing broker enter into a listing agreement that outlines all the sale details, including the commission earned by the agents and brokers. The commission is typically divided equally between the agents and brokers, but there may be instances where brokers receive a higher percentage. This is all decided beforehand.

Clarion Title Company in Birmingham is Here to Help

Now that you understand how real estate agents are paid if you need any help purchasing, listing, or refinancing your home or commercial property, let Clarion Title in Birmingham help. We make it easy to order a title search online and provide all the real estate title resources you need.