Toby has been working with a lot of first-time home buyers over the past six months. And the discussions invariably reach a point where they ask …
“How do you get paid?”
And this is a valid question and one that is easily — 
but yet not so easily — answered.
The Easy Part: How I Get Paid
If the home is listed with a Realtor (i.e. you’d find it on Realtor.com) then the ”co-op” split is determined already. In central Ohio the most common split is 3 percent but it can range from 1-5 percent depending on the property and the listing agreement.
My brokerage (Disbennett Real Estate Company) receives that percentage of the purchase price and then depending on the split with the agency, I get a check. As a new agent, I am on a 50/50 split with the broker.
So, to make it a little easier to see. Assuming the purchase of a Delaware-average $150,000 home with 3 percent as the co-op percentage.
- Price: $150,000
- Co-Op Split: $4,500 (3% of price)
- Toby’s Gross Take: $2,250 (50% of Split)
- E&O Portion: $50 (per transaction charge for an insurance that is similar to Malpractice)
- Toby’s Net Take: $2,200
Now you’ll notice that I didn’t have any taxes taken out in the gross versus the net, that’s because I’m an independent contractor. So I get to pay Uncle Sam out of my own pocket, so deduct about 40 percent of that $2,200 for taxes and I’m left with about $1,320. A lot of which goes right back into my business when you consider that we haven’t even touched gas and other expenses incurred in finding you a home.
The Hard Part: Who Pays Me?
A lot of buyer agents will represent themselves as being “free” and I don’t agree with this. But there are two schools of thought on how buyer’s agents are paid.
- First, the seller pays the costs. It is “part-of” the purchase price of the home. And this is true in that it doesn’t matter who the buyer is, the seller payment amount is dictated by her original listing agreement.
- The other side is that the buyer is paying the buyer’s agent as part of her mortgage. So, the buyer is paying for my services rather than the seller.
Which argument do I subscribe to? Well that depends on the question that’s asked.
Under the current set-up, the seller is paying for the buyer’s representation. Now there is a movement afloat on the West Coast that allows each party to negotiate their own portion of the commission. This is an interesting concept and one that I think will eventually make in-roads into the Ohio area.
Photo by Steve Woods and used via license of Stock.xchng.
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