Working with a real estate agent when buying or selling a home in Arizona is par for the course. But have you ever wondered how real estate agents get paid?

When you first begin working with an agent (which 88% of buyers do), you don’t pay for their services upfront. And if you’re a buyer, you’ll never pay anything directly to your agent. Rather, both buyer and seller agents work based on commission and only receive a payment if a sale is made. That payment is calculated based on the home’s final selling price and is paid by the seller.

Real estate agent giving buyer the key

Here’s a closer look at how real estate commissions work in Arizona:

Real estate agents are paid for service, not time.

Many home buyers and sellers are surprised to know that real estate agents are not paid by the hour. Rather, they receive a portion of the home sale when a deal is finalized. Every home sale involving a real estate agent is subjected to a commission somewhere around 6%, which is split between the buyer and seller agents.

One needs to also understand there is no set commission model out there. In fact, there are several types of commission models out there. Both the agent and the client need to be aware of this to make sure their expectations align with each other. Roughly 93% of the real estate agents in the industry barely sell any homes, so they may be delivering lower services at a higher real estate commission. Real estate agent commissions should reflect service and risk factors for the real estate agent.

This means that agents who work with buyers or sellers for weeks or months at a time and don’t result in a sale do not get paid.

How much do real estate agents make?

Hot markets like Arizona are ideal for real estate agents who want to earn a comfortable (and predictable) living. Commissions on a typical home sale are roughly 6%. Let’s translate this into real numbers:

In Phoenix, the median home price is $295,481, according to current Zillow data. If a home sold for this amount, then a 6% commission would equate to roughly $17,700. With an even split between the buyer and seller agent, this means that each agent would earn about $8,850 on the sale.

In most cases, the agents evenly split the 6% commission. However, there may be times where an uneven split is negotiated. Sellers may sometimes try to negotiate a lower commission, while seller agents may agree to give the buyer’s agent a higher share in order to encourage showings.

Real estate agent showing 3D rendering of property interior to client

How do real estate agents get paid?

The 6% commission is paid by the seller when the property sells. However, the seller doesn’t directly pay the real estate agent. Rather, the payment goes through the brokerages of the buyer’s agent and seller’s agent. The brokers typically receive a small portion of the commission, then the remaining commission goes to the agents according to the agreement.

Many real estate agents belong to a support system called a real estate team. The team handles most to all of the lead generation, a licensed agent call center doing appointment setting, full admin support, and providing systems, platforms, on-demand training, coaching, and mentorship to grow. The team pays the lion share or all of the agents’ real estate expenses, so most times the agent on a team makes more net per transaction than the owner of the team does. Therefore, there will be additional layers of commission splits for real estate agents on a real estate team.

With every real estate transaction, the commission and payment terms are spelled out in the contract. This ensures that both the buyer’s agent and seller’s agent get paid fairly and know what to expect once a deal closes.

Listing agents and their brokers spend money and time in marketing their properties to find suitable buyers, so their commissions help to cover those costs.

Real estate agent commission should be the last thing a real estate agent thinks about. They should be thinking about all of the things it takes to run a solid real estate business. If a real estate agent is a solo agent, they will actually net less per transaction, because of the services the real estate team gives them they would have to pay for that all on their own. If they were to skip any of it, then they would be delivering lesser services to their clients.

Whether you’re buying or selling a home in Arizona, or you’re a licensed Arizona real estate agent looking to grow your career, the most important factor to consider is the professional support you receive during the transaction. Using the right brokerage can make all the difference in your experience and make the commission worth every penny.

Real estate agent training session

Real Estate Agent Training

If you are a real estate agent looking for direction in your real estate career in Arizona, then you will want to visit Dorrmat for more Arizona real estate agent insight on how real estate agents succeed in real estate. You will gain a wealth of information on seller lead generation, and much more. The website offers an abundance for real estate agents who want to become a listing agent.

To become a listing agent, you first must master real estate lead generation, then the ability to turn those leads into appointments with proper scripting and rebuttal techniques, then the ability with the right listing presentation to be able to get the listing, and finally the right support to deliver five-star experiences to the sellers, so that you can grow your real estate business.

It comes down to if you want to focus on commission split or growing as a real estate agent to deliver the most impactful experience for your clients to grow a larger repeat and referral system. Agents that focus on the real estate commission typically fail, because their eyes are on the ball vs the prize.