Commissions in Real Estate: What You Pay vs. What You Get

Commissions in Real Estate: What You Pay vs. What You Get

“Price is what you pay. Value is what you get.”
—Warren Buffet

When selling a home, one of the most talked-about topics is real estate commissions. This is how real estate professionals earn their income, but there’s often confusion about what commissions cover and why they matter. Let’s break it down.

No Standard Commission in Real Estate

Contrary to popular belief, there is no “standard commission” in the real estate industry. Having a fixed commission would be considered price fixing and is illegal. Some REALTORS® offer discounted services at lower fees, which often translates to fewer services. Others, like me, provide a full suite of services and work at full-service brokerages to deliver maximum value to clients.

A Unique Payment Model

Real estate is one of the few professions where the client holds all the power. Here’s why:

• No Upfront Costs: Unlike most services where payment is required before work begins, real estate professionals invest their time, expertise, and personal funds upfront.
• Performance-Based Payment: REALTORS® only get paid when a transaction is successful and the sale is completed. If the deal doesn’t close, they don’t receive compensation—even though they’ve worked tirelessly to market the property, negotiate offers, and ensure compliance with legal regulations.

To put this into perspective, imagine hiring a website designer who invests hours building your website. Instead of paying them upfront or on delivery, you only pay them if you decide to launch the site. That’s the level of risk REALTORS® take for their clients.