Real estate brokers and agents are a lot like waiters. They’re there to help you out, but they also expect to get paid for that help. Their salaries are often based on a percentage of the home’s value, which means that if the house sells for more than expected, they come out ahead. Here’s how the process works:
Brokers Aren’t Paid By The Hour
Brokers aren’t paid by the hour, they’re paid a commission based on the sale price of a house. This means that brokers are incentivized to get the highest price possible and close as quickly as possible–and since sellers usually want cash in hand immediately, this means real estate agents often move forward without knowing all of their options or even considering whether or not it’s right for them.
They Are Paid A Percentage Of The Loan Amount
Mortgage brokers are paid a percentage of the loan amount, which is typically between 1% and 3%. The larger your mortgage, the higher your broker’s commission will be. For example, if you take out a $500,000 mortgage and pay 2% in fees and commissions (which includes everything from application costs to legal fees), then your lender will make $10k while they give half of it away!
Brokers Make Money For Every Referral
A broker can make money in several ways:
• Referral fees. Brokers get paid when they refer a client to another broker, who then sells them a home.
• Commission for selling a home to a buyer referred by the broker (seller’s agent). The seller pays his or her agent for helping them sell their house, but it’s not just about getting rid of one property–it’s about finding someone who wants to buy another one!
• Commission for selling a home to someone referred by the seller (buyer’s agent). Think about it: why would anyone pay two commissions instead of just paying one? That’s right–because there may be more buyers than sellers at any given time!
Commissions Paid On Other Services
While it’s true that real estate brokers receive a commission only when they sell your home, they can still earn extra income by referring you to other companies who will pay them a fee if you use their service. This can include anything from mortgage lenders to handymen, landscapers, and more!
Conclusion
Hopefully, this has given you a better understanding of why real estate brokers take so much out of each sale. If you’re looking for a new agent, remember that they have the incentive to make sure that they get paid as much as possible.
They also have other sources of income besides just commissions on sales–for example, mortgage brokers often get paid by the lender or bank who gives them the business (and sometimes even directly from borrowers). So when choosing someone to help with your next home purchase or sale, think carefully about whether their interests align with yours!
