How a Listing Agent Gets Paid


How exactly does your listing agent get paid? Who pays your listing agent? What you need to know about all that fine print.

Listing Agent

When a home is listed for sale with a real estate company, the seller is ultimately agreeing to pay both the listing agent and the buyer’s agent and their respective companies. In some cases, the commission may be a percentage of the sales price or it may be a flat fee. When and how the parties are paid is a little complicated. Here’s a quick explanation of what you need to know.

When a seller signs an exclusive agreement to list a home, this means the agent is entitled to a commission regardless of who finds a buyer, even if it is you. But, in an open-listing agreement, only the brokerage firm that produces the buyer is entitled to the commission. Should you decide to sell the property on your own or find another agent to sell your home, the holder of the open listing isn’t in line to receive anything. Not surprisingly, most agents will insist on an exclusive agreement to list your home.

If you are listing your home with a brokerage firm, in rare situations you may have to pay a commission even if your home doesn’t sell. If the listing agent is, according to the contract, able to produce a “ready, willing, and able buyer” to purchase your home, the agent is legally entitled to a commission even if your home doesn’t end up reaching the closing table. It’s quite possible your agent will agree to receive a commission only upon completion of the sale. However, don’t assume that’s the case. Insist on having it in writing.

The sales commission is based on the agreed-upon sales price.

The buyer may ask the seller to contribute money toward closing costs, repairs, taxes, or any number of things. The commission is based on the selling price of the home. It is not based on the selling price minus any closing costs or other costs out of your pocket. Again, make sure the language and expectations of each party are clear before signing any sales contract. At closing, the seller pays the sales commission to the settlement agent’s trust account. The attorney or escrow agent then pays the brokerage firms of both the listing and buyer agents. Each company subsequently pays the agents.

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Published by Jeff Anderson

We are your premier real estate solutions team. We solve complex real estate issues.