How Do Commissions Work In Real Estate?

In Arizona real estate transactions, which party—the buyers or sellers—pays for an agent’s commission?

Here in the Grand Canyon State, commissions are usually paid for by the sellers. On average, they usually pay about 6%.

You might think that 6% of $500,000 is a lot of money, and you’d be right. However, that commission is actually split between a buyer’s agent brokerage and a seller’s agent brokerage. Neither agent gets to keep the full commission.

Now, you should beware of agents that are cutting their commission to 5%. This is because sometimes, they’ll charge 5% and pay 3% to the seller’s agent brokerage and 2% to the buyer’s agent brokerage.

As a buyer’s agent in this commision-based business, if you have two properties to show and one of them is paying out 3% while the other is paying out 2%, which one would you be more enthusiastic to show? The answer is pretty clear, so make sure that your agent is paying out a full 3% to the buyer’s agent brokerage so that you can net the most money possible.

If you have any questions about this topic, please feel free to reach out to me. I’d love to help you out.