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Compensation plan for real estate agents

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real estate

The compensation plan includes details about a worker’s salary, bonuses, benefits, and conditions of payment. It also contains information about increases in salaries and wages. Just like every other worker, real estate agents also have a compensation plan. Keep reading to find out details about compensation plans for real estate agents. Read more about Blue World City.


Real estate agents are commonly paid commissions in exchange for their services worldwide. The commission is calculated by applying a certain percentage to the value of the property that the real estate agent helped purchase. Therefore, the commission received by the real estate agent varies in every transaction depending on the price of the property. However, the commission is also given out as a fixed fee to the real estate agent in some cases. The commission is mentioned in the listing agreement and is decided before the process is started. The listing agreement is a contract made and signed by the real estate agent and the broker and includes all the details about the deal and mentions any conditions that are set. The commission rate applied can range widely and is not fixed by any authority or government sector. The commission is usually between 4% and 6% and can increase or decrease depending on the conditions of the market. The seller is the one formally paying the commission; however, most sellers add the commission amount into the total selling price of the property, so technically, the buyer is also paying at least half of the commission. Invest in Capital Smart City.

Why do real estate agents need brokers?

A real estate agent is a professional with a license, but they have to work under a real estate broker. They are not allowed to receive the commission directly from the client and have to involve a real estate broker. The real estate broker receives the commission from the client and splits it among the agents while keeping their own share as well. The splitting ratio between the real estate agent and the real estate broker is usually 50/50; however, the rules may differ. The broker gives new real estate agents with less experience a lower share of the commission, and the big real estate brokers keep the major share for themselves.

Problems with the compensation plan for real estate agents

This compensation plan has been adopted worldwide and has existed for a long time; however, this compensation plan does have its flaws. The biggest problem is the dependency of real estate agents on real estate brokers. Many people complain that the brokers do not spend enough money or time on the training of real estate agents, which prevents the development of real estate agents. Furthermore, most brokers are only concerned about the money and exploit the new agents. They make them work hard and pay them less than their work is worth. There is also a lot of risks involved in this compensation plan. A commission is only received when the deal is closed, and all the matters are settled. It does not matter how much work you have put into the deal; if any of the parties back out, the deal will no longer happen, and you will be left with nothing. As a real estate agent, you can not predict the number of deals you can close off, and hence you can not predict your future income. In the case where no deal is settled, the agent’s income will be zero and may find it hard to survive. Due to this, many broker companies and real estate websites are now hiring real estate agents on a salary basis. This gives the real estate agents more certainty about their earnings and allows them to plan for the future. Read more about 1947 Housing.


Overall, the amount earned by real estate agents is high, and therefore more and more people are choosing this as a career.

Author Bio

Ramza Zahra is a Karachi-based freelance content writer who uses her life experiences and curious nature to research and pen it down and make a living. Currently, she is working with Sigma Properties as an Snr. Content Writer.

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