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How and When Commission Is Earned

When completing the listing agreement, you and your agent will negotiate and agree on the amount of the real estate commission.

When you agree to a commission with a listing agent, you should keep in mind that there are usually two agents involved in most transactions.  Most of the time, only part of the commission goes to the listing agent's company.  The other portion goes to the company representing the buyer.

Your listing contract specifies a listing price. Your agent’s job is to bring a "ready, willing and able" buyer to present an offer. If you reach agreement with the buyer, then the agent has done his job and earned the commission. Once the sale has closed, the real estate broker gets paid from the proceeds of the sale.

If the buyer proves unable or unwilling to conclude the sale, the house is placed back on the market and the agent has to begin earning his or her commission all over again.

However, if the seller backs out or does not accept an offer that meets the price and terms of the listing agreement, the listing broker has still earned the commission. They may want to be paid, even though you did not actually sell your home. Therefore, it is very important to carefully consider every detail when completing your listing contract and accepting an offer to buy your property.

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