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References
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Compensation Structures for REALTORS®
NAR Member Profile (National Association of REALTORS®, 2022)
The median gross income of REALTORS®—income earned from real estate activities—was $54,300 in 2021, an increase from $43,330 in 2020. Those who function as sales agents typically reported a median income of $38,300, an increase from $33,800, reported in 2020. Broker owners, managers, and appraisers had higher gross and net incomes than other groups.
Compensation Plan Basics
The Average Real Estate Broker Salary for Every State (The Close, May 18, 2023)
Real estate brokers generally earn their income from two primary sources: a base salary and commissions. Their income is made up of the incoming revenue of the real estate brokerage. This money comes primarily from a portion of each of the commissions the agents within the office earn. This is commonly referred to as a “split.” A common split is 75-25, meaning that for every property bought or sold, the agent keeps 75% and the brokerage gets 25%.
How Do Real Estate Agents Get Paid? (SmartAsset, May 9, 2023)
Experienced agents could get 100% of the commission. These agents pay “desk rent” to their brokers instead of splitting the commission. Sometimes one or more of the agents also has the additional training and licensing to act as his or her own broker. Then the agent-broker doesn’t have to split his or her share.
The Real Estate Commission: How Much are Realtor Fees? (realtor.com®, Jan. 31, 2023)
Learn from a REALTOR® about how real estate agents are paid and how buyers/sellers compensate real estate agents. The article discusses what the real estate commission covers, what a typical compensation structure looks like for buyers and sellers’ agents, how the buyer/seller splits the compensation, and answers the question “Is a real estate commission negotiable?”
Who Pays the Commission to the Real Estate Agent? (The Balance, Jun. 30, 2022)
“Many home buyers and sellers don't understand exactly who pays the real estate agent involved in the transaction. To understand who pays real estate commissions—whether it's sellers or buyers or both—look at how real estate agents are paid and how they share cooperating commissions.”
What is a Real Estate Commission? 5 Myths Busted for First-Time Sellers (HomeLight, Jan. 6, 2022)
In this article, learn the basics about agent fees and commissions and how commission rates fluctuate with the market. Then understand the breakdown of services for both buyers and sellers that are offered because of commissions, including “prepping and presenting the house,” “working with the appraiser,” “reviewing offers,” showing properties,” and “building relationships with the sellers.” Finally, bust a few common commission related myths, including myths about discounted commissions, negotiation, and dual agency.
2022 National Real Estate Compensation Survey (CEL & Associates, 2022)The annual National Real Estate Compensation Survey by CEL & Associates survey incorporates over 190 positions and nearly 400 participant companies in the office, industrial, retail, residential, advisory and brokerage/services sectors. It incorporates public and private companies engaged in investment, management, development, construction, leasing and many other real estate functions. Utilize this data to compare salary ranges for various roles throughout the real estate industry.
Methods of Compensating Real Estate Agents (The Balance, Nov. 20, 2019)
“Real estate agents are compensated in various ways, so when choosing a broker, understand that the commission arrangement may not be the most important factor. Weigh the services your broker provides to agents, as well as the expected number of prospect leads and their quality.” Understand the different types of real estate compensation structures, including “the Traditional Broker/Agent Commission Split,” “the 100% Commission Split Model,” “Referral Fees from One Brokerage to Another and Agent Split,” and “Percentage Paid to Real Estate Franchise for Business.”
Compensation and Short Sales
Short Sale Transaction and Processing Requirements (Freddie Mac, Apr. 1, 2023)
This “Seller/Servicer Guide” outlines Freddie Mac’s guidelines for short sales. “Unless a real estate broker's sales commission exceeds 6% of the Mortgaged Premises sales price, the Servicer must not, as a condition of the Servicer's acceptance of an offer, renegotiate the real estate broker's sales commission to an amount that is lower than the amount that was originally agreed upon between the broker and the Borrower. In the event the sales commission exceeds 6%, the Servicer must renegotiate the commission to limit it to 6% of the Mortgaged Premises' sales price.”
Freddie Mac Standard Short Sale FAQ (Freddie Mac, Jul. 7, 2022)
If there is more than one real estate professional facilitating the short sale transaction, can they split the commission?
Real estate professionals can split the commission among themselves. The amounts will be based on the terms of their real estate brokerage agreement and any applicable real estate laws. Freddie Mac does not dictate how the commission is divided.
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
Ready-Made Employment Contracts, Letters & Forms (eBook)
What Your CEO Needs to Know About Sales Compensation (eBook)
Compensating the Sales Force (eBook)
Books, Videos, Research Reports & More
As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.
Center for REALTOR® Financial Wellness (National Association of REALTORS®)
The National Association of REALTORS® is proud to offer members the Center for REALTOR® Financial Wellness, a resource designed to help you understand your financial planning options and prepare for the future, one step at a time.
111 Ways to Justify Your Commission: Value Adding Strategies for Real Estate Agents and Brokers (New York, NY: Kaplan, 2007) HD1382 .L44
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The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.