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Commissions
explained
Traditionally
the commission is paid for by the seller from the equity of the
house. And for the seller this always seems like a such a
burden. It is rarely understood how the commissions paid are
"trickled" down to each party, including Uncle Sam.
The commissions paid are split four ways. What ever the
commission is that the seller and broker agree on, is then split
between that seller’s agent and the agent that brings in the
buyer.
And it
doesn’t stop there. Then, each agent (unless a licensed and
independent broker themselves) splits their gross commission in
half with their broker.
Then,
Depending on whom the agent works for, if it is a national
franchise, there are franchise fees that are automatically
deducted from their commission prior to the close of escrow.
Some go as high as 8%
To
better understand this, let’s use an example. A house sold for
$200,00 and commissions paid were at 6%. The gross commissions
to be split would be $12,000.00. Each side (buyer’s agent and
seller’s agent) gets half. So lets work with just the
seller’s agent to keep it easier. Let’s say the seller’s
agent is at a 70% split with their broker. So the agent is left
with $4200.00 gross commissions. Then, if they work for a major
company, their franchise fees could be as high as 8%. 8% of
$4200 is $480. Minus that from their gross commissions are
they’re left with $3800. Their net commissions is $3800, but
it doesn’t stop there. Then they have to deduct what costs
were invested to market the home (advertising, brochures etc.),
these costs come from the agents pocket. And last but not least,
being an "Independent Contractor" the agent must
deduct about 30% of their gross commissions (in this case 30% of
$2760 equals $1260.00) to set aside and pay taxes. Let’s
say that marketing cost them at least $500.00, So what is
the average agent left with? a whomping $1,960for about 90 days
of work.
Total
commission was $12,000
Split
50/50 between Listing Office & Selling office= $6000 each
Split
70/30 between agent and broker= $4200 agent
Take
out 8% for franchise fees=$480
Take
out 30% for taxes=$1260
Plus
take out $500 on average for marketing expenses.
Total
left for the agent $1,960.00
That's
a big difference from 12,000.00 dollars
If
you have any questions, Please call
1-866-624-6873
or
E-mail us!
postmaster@thetrailsagent.com
©
2001 OChomeprices.com - All rights reserved.
Written
By The Las Vegas Home Finder Team
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