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Where Does a REALTOR’s Commission Actually Go?
Where Does a REALTOR’s Commission Go?
When people hear that a home sold for $400,000, it’s easy to assume the REALTOR® just walked away with a huge paycheck.
I hear comments like this all the time:
“Wow! You must have made a fortune on that sale!”
The reality is…that’s almost never how it works.
One of the biggest misconceptions in real estate is that REALTORS® keep the entire commission. In reality, the money is negotiated, divided, and used to cover the many costs of running a real estate business.
Let’s pull back the curtain and take a look at where a REALTOR’s commission actually goes.
First Things First: REALTORS® Only Get Paid if the Transaction Closes
This surprises a lot of people.
Most REALTORS® don’t earn an hourly wage or salary.
We don’t get paid for:
- Showing homes
- Hosting open houses
- Writing offers
- Negotiating contracts
- Coordinating inspections
- Driving across town for showings
- Answering evening and weekend phone calls
- Solving last-minute problems before closing
If a transaction falls apart before closing, the REALTOR® has often invested dozens…or even hundreds…of hours without receiving any compensation.
That’s simply part of the business.
How Commission Works Today
Let’s use a simple example.
Imagine a home sells for $400,000.
When a seller lists their home, they negotiate and agree to a listing fee with their listing brokerage. That fee covers the professional services provided to market and sell the property.
The seller may also choose to offer compensation to a buyer’s broker, but they are not required to do so.
If a seller chooses not to offer buyer broker compensation, or offers less than what a buyer and their agent have agreed to, the buyer can ask the seller to contribute toward that compensation as part of the purchase offer. Just like the purchase price, repairs, or closing costs, buyer agent compensation can be negotiated during the transaction.
Every real estate transaction is unique.
Speaking of common misconceptions, you may also enjoy reading What Actually Stays with the House When You Sell?
Then the Commission Is Divided
Whether the compensation comes from the listing agreement, a negotiated seller concession, the buyer, or a combination of those sources, the money doesn’t simply go straight into one REALTOR®’s bank account.
Instead, the funds are distributed according to the agreements in place.
That often means the money is divided between:
- The listing brokerage
- The listing agent
- The buyer’s brokerage
- The buyer’s agent
Exactly how that distribution looks depends on the transaction and the agreements everyone has in place.
Where Does a REALTOR’s Commission Actually Go?
Let’s imagine a REALTOR®’s brokerage receives $12,000 in compensation from a transaction.
Many people assume that’s what the REALTOR® takes home.
In reality, that’s just the starting point.
Before an agent ever receives a paycheck, that money may be reduced by things like:
- Brokerage split
- Transaction fees
- Franchise or royalty fees (if applicable)
- Errors & Omissions (E&O) insurance
- MLS fees
- Local, state, and national REALTOR® association dues
- Licensing fees
- Continuing education
- Marketing and advertising
- Professional photography and videography
- Signs and lockboxes
- CRM and technology subscriptions
- Fuel and vehicle expenses
- Office expenses
- Self-employment taxes
- Health insurance
- Retirement savings
Most REALTORS® are independent contractors, meaning they pay these expenses themselves.
Like any small business owner, they’re responsible for investing back into their business so they can continue serving clients.
REALTORS® Don’t Have a Guaranteed Paycheck
Unlike many professions, REALTORS® don’t receive:
- Paid vacations
- Sick leave
- Employer-sponsored retirement plans
- Guaranteed weekly paychecks
Some months include several closings.
Other months may include none, even though the work never stopped.
That’s why REALTORS® spend so much time building relationships, continuing their education, marketing their business, and serving clients long before payday ever arrives.
So…Is It Worth It?
Absolutely.
Helping first-time buyers get the keys to their first home.
Helping growing families find more space.
Helping empty nesters start their next chapter.
Those moments are why so many REALTORS® love what they do.
Behind every successful closing are weeks…or sometimes months…of work that most people never see.
The Bottom Line
The next time you hear someone say,
“That REALTOR® made a fortune on one sale.”
Remember there’s much more happening behind the scenes.
Before a REALTOR® ever sees a paycheck, the compensation has often been negotiated, divided according to multiple agreements, and used to cover the many costs of operating a real estate business.
And perhaps the biggest misconception of all?
REALTORS® don’t get paid when they start working.
Most only get paid if they successfully make it to the closing table.
Have Questions?
Real estate has changed over the past few years, and there’s a lot of misinformation floating around.
If you have questions about how commissions work, buyer agreements, or the home buying and selling process, we’re always happy to help.
The more you understand, the more confident you’ll feel when it’s time to make your next move.
If you’re preparing to sell, you may also enjoy our article on Should You Renovate Before Selling Your Home?
So, Where Does a REALTOR’s Commission Go? “It depends.”
Should You Renovate Before Selling Your Home?
Real Estate Explained
Should You Renovate Before Selling Your Home?
If you’re thinking about selling your home, you’ve probably asked yourself one of the most common questions homeowners face:
“Should I renovate before I list my home?”
The honest answer?
It depends.
Some improvements can help your home sell faster and potentially for more money. Others may cost thousands of dollars without adding much value at all.
So, Before you start knocking down walls or replacing every countertop, here’s what you should know.
Start With the Simple Things
The best return on investment doesn’t always come from major renovations.
Sometimes, the biggest impact comes from making your home feel clean, well-maintained, and move-in ready.
A few simple updates like:
- Fresh paint
- Deep cleaning
- Touch-up landscaping
- Replacing burned-out light bulbs
- Decluttering
- Cleaning windows
can completely change a buyer’s first impression.
Many buyers aren’t looking for perfection, they’re looking for a home that has been well cared for.
Not Every Renovation Pays You Back
One of the biggest mistakes sellers make is assuming every dollar they spend will increase the value of their home.
Unfortunately, that’s not always how it works.
A $40,000 kitchen remodel doesn’t automatically increase your home’s value by $40,000.
In fact, some highly personalized upgrades may actually make it harder for buyers to picture themselves living there.
Instead of asking,
“What do I want?”
ask,
“What will today’s buyers appreciate?”
Every Neighborhood Is Different
The improvements that make sense for one home may not make sense for another.
For example:
A home in one neighborhood may need updated flooring to stay competitive.
Another neighborhood may place more value on outdoor living spaces.
In some cases, buyers expect fully updated homes.
In others, they expect to personalize the home themselves.
That’s why local market knowledge matters.
Focus on Repairs First
Before investing in cosmetic upgrades, make sure the basics are covered.
Buyers notice things like:
- Leaky faucets
- Damaged flooring
- Peeling paint
- Broken door handles
- Loose railings
- HVAC issues
Small maintenance items can create the impression that larger problems have been ignored.
Because of this, fixing these issues first often provides a better return than expensive cosmetic renovations.
Should You Renovate?
Here’s a simple guide.
Renovations that often pay off:
✔️ Fresh neutral paint
✔️ Updated lighting
✔️ Landscaping
✔️ Professional cleaning
✔️ Minor kitchen or bathroom updates
✔️ New hardware and fixtures
Renovations to think carefully about:
- Luxury kitchen remodels
- High-end appliances
- Removing walls
- Custom finishes
- Swimming pools
- Highly personalized upgrades
Every situation is different.
Talk to a REALTOR® Before You Spend the Money
One of the biggest advantages of working with a local REALTOR® is knowing where to invest and where not to.
Before spending thousands of dollars, ask an agent who understands your neighborhood and current buyer expectations.
Sometimes, spending $500 wisely can have a bigger impact than spending $20,000 in the wrong place.
The Bottom Line
Should you renovate before selling your home?
It depends.
The right improvements can absolutely help your home attract buyers and maximize its value.
The wrong improvements can cost time, money, and unnecessary stress.
Before starting your next project, let’s have a conversation about what makes the most sense for your home, your neighborhood, and your goals.
Sometimes the smartest renovation is knowing when not to renovate.
Why Some Homes Sell Fast… and Others Sit on the Market
Why Some Homes Sell Fast…and Others Sit on the Market.
Real Estate Explained
Every time a home sells in a weekend, people ask the same question:
“What made that house sell so fast?”
And every time a home sits on the market for weeks or even months, people assume the answer is simple.
“It must be overpriced.”
Sometimes that’s true.
But not always.
The truth is, there are usually several factors working together to determine how quickly a home sells.
I’ve watched homes that needed cosmetic updates receive multiple offers because they were priced well and marketed effectively. I’ve also seen beautifully updated homes sit on the market because they missed the mark on pricing or presentation.
Price Is Important… But It Isn’t Everything
Pricing is one of the biggest pieces of the puzzle.
A home that’s priced too high can scare buyers away before they ever schedule a showing.
But pricing isn’t just about picking a number that “sounds right.” It’s about understanding the local market, comparable sales, current competition, and buyer demand.
Sometimes pricing a home competitively creates more interest, more showings, and even multiple offers.
First Impressions Start Online
Today’s buyers usually see your home online before they ever step through the front door.
That means your listing photos matter…a lot.
Bright, professional photos can make a home feel inviting.
Dark, blurry, or poorly composed photos can cause buyers to scroll right past a perfectly wonderful house.
Your online listing is your home’s first showing.
Make it count.
Condition Matters
You don’t need a fully renovated kitchen to sell your home.
But buyers do notice the little things.
Fresh paint.
A clean entryway.
Well-maintained landscaping.
Working light bulbs.
Small improvements can help buyers focus on the home instead of a growing list of projects.
Timing Can Make a Difference
Spring is traditionally a busy season, but homes sell year-round.
In fact, selling in the fall can sometimes mean less competition because there are fewer homes on the market.
The “best” time to sell depends on your goals and your local market, not just the calendar.
Marketing Is More Than Putting a Sign in the Yard
A great home deserves great marketing.
Professional photography.
Thoughtful descriptions.
Social media exposure.
Targeted advertising.
Agent networking.
The more qualified buyers who see your home, the better your chances of finding the right one quickly.
Buyers Don’t Just Buy Houses
They buy possibilities.
If you’re beginning your home search, browse homes currently available in Auburn and Opelika.
They picture birthday parties in the backyard.
Coffee on the porch.
Holiday dinners around the table.
The homes that create an emotional connection are often the ones buyers remember long after the showing ends.
So… Why Do Some Homes Sell Faster?
It’s rarely because of just one thing.
Usually it’s a combination of:
- Pricing
- Presentation
- Marketing
- Timing
- Buyer demand
- Strategy
The good news?
Most of those things are within your control.
Selling a home isn’t about luck.
It’s about making thoughtful decisions before your home ever hits the market.
Whether you’re thinking about selling next month or next year, having a plan can make all the difference.
What Actually Stays With the House When You Buy It?
What Stays With the House When You Buy It?
Have you ever walked through a home and wondered, “Does that refrigerator come with it?” Or maybe you fell in love with a porch swing, a beautiful chandelier, or even a one-of-a-kind carousel horse in the backyard. What Stays With the House When You Buy It?
The answer might surprise you.
One of the biggest misconceptions in real estate is that everything you see during a showing automatically comes with the home. In reality, some items stay with the property, while others belong to the seller unless they’re specifically included in the purchase agreement.
Let’s break it down.
What Usually Stays
In general, anything considered a fixture stays with the home. A fixture is something that’s permanently attached to the property.
Common examples include:
- Built-in cabinets and shelving
- Light fixtures and ceiling fans
- Bathroom mirrors that are attached to the wall
- Window blinds or shades
- Built-in appliances like dishwashers and ovens
- Mailboxes
- Landscaping that is planted in the ground
These items are considered part of the property and are typically included in the sale unless the seller specifically excludes them.
What Usually Doesn’t Stay
Personal property belongs to the seller and usually moves with them.
This often includes:
- Furniture
- Televisions
- Rugs
- Artwork
- Patio furniture
- Grills
- Potted plants
- Decorative mirrors that are simply hung on a nail
Even if an item looks like it “belongs” with the home, that doesn’t necessarily mean it’s included.
The Gray Areas
This is where things can get interesting.
Items like these often create questions:
- Refrigerators
- Washers and dryers
- Security cameras
- Porch swings
- Playsets
- Sheds
- Mounted televisions
- TV wall mounts
- Hot tubs
- Garage shelving
Some sellers plan to leave them. Others intend to take them.
The only way to know is to ask.
What If You Love Something Unique?
Maybe it’s a custom-built dining table that fits the breakfast nook perfectly.
Maybe it’s the porch swing where you can already picture yourself drinking coffee.
Or maybe it’s a vintage carousel horse sitting proudly in the backyard.
If it makes the property feel like home, don’t be afraid to ask if it can stay.
The seller may say no, but they might also be perfectly happy to leave it behind. Sometimes they don’t want the hassle of moving it, and sometimes they’re simply willing to include it as part of the negotiation.
You never know unless you ask.
The Most Important Rule
Real estate contracts are designed to eliminate assumptions.
If you want something to stay, it should be written into the purchase agreement.
If the seller plans to take something that buyers might reasonably expect to remain, that should be clearly stated as well.
Clear expectations help prevent misunderstandings and keep everyone on the same page.
Before writing an offer, it’s important to make sure everything you want to stay (or not stay) be discussed with your agent. This also will help determine what a great offer looks like.
Final Thoughts
If you’re just beginning your search, you can browse homes currently available in the Auburn and Opelika area.
Buying a home isn’t just about four walls and a roof. Sometimes it’s the little details that make you fall in love with a property.
Whether it’s a refrigerator, a porch swing, or a carousel horse, remember this simple rule:
If you want it, ask for it. If it’s important to either party, put it in writing.
Because when it comes to real estate, clarity is always better than assumptions.
Have questions about what should be included in your offer? We’d be happy to help.
Why Price Per Square Foot Can Be One of the Most Misleading Numbers in Real Estate
Price Per Square Foot – The Most Misunderstood Number In Real Estate
Helping buyers and sellers across East Alabama understand real estate, one question at a time.
“What’s the price per square foot in my neighborhood?”
As Realtors®, this is one of the most common questions we get from homeowners.
It’s an understandable question. Price per square foot is easy to find online, it’s often mentioned in market reports, and it seems like a quick way to estimate what a home might be worth.
In fact, many sellers become attached to that number before we ever sit down to discuss pricing.
The problem is that relying too heavily on price per square foot can create unrealistic expectations. In today’s market, pricing a home based on a simple calculation instead of its true market value can lead to fewer showings, lower offers, and ultimately more time on the market.
Before we talk about why, it’s important to understand what price per square foot actually tells us…and what it doesn’t.
What Is Price Per Square Foot?
Price per square foot is exactly what it sounds like. You take the sale price of a home and divide it by its finished square footage.
For example:
- A home that sells for $400,000 with 2,000 square feet sold for $200 per square foot.
It’s a useful statistic because it helps identify general trends in a neighborhood or local market.
The key word, however, is general.
It’s a market indicator, not a pricing formula.
No Two Homes Are Truly the Same
Imagine two homes that are both 2,000 square feet.
One backs up to a golf course.
The other sits on a busy road.
One has a beautifully renovated kitchen with custom cabinetry and quartz countertops.
The other still has its original finishes from twenty years ago.
One has a screened porch overlooking a private backyard.
The other has no outdoor living space at all.
Even though they’re exactly the same size, they are unlikely to sell for the same price.
Square footage is only one piece of the puzzle.
Smaller Homes Often Have a Higher Price Per Square Foot
This surprises many homeowners.
A 1,400-square-foot home may actually sell for a higher price per square foot than a 3,200-square-foot home in the very same neighborhood.
Why?
Because certain parts of every home carry significant value regardless of size.
Think about the kitchen.
Bathrooms.
The garage.
The roof.
The HVAC system.
The lot itself.
Those costs don’t double simply because the house is larger. Since those fixed-value features are spread across fewer square feet in a smaller home, the price per square foot is often higher.
That’s completely normal.
Buyers Don’t Shop With Calculators (Well, Most buyers anyway)
When buyers walk through a home, they aren’t thinking:
“This feels like exactly $212 per square foot.”
Instead, they’re asking themselves questions like:
- Can I picture my family living here?
- Is the kitchen updated?
- Do I love the backyard?
- Is there enough storage?
- Does the layout work for our lifestyle?
- Is this home worth the asking price compared to others I’ve seen?
Those emotional and practical decisions influence value far more than a simple mathematical formula.
Location Can Change Everything
You’ve probably heard the phrase:
Location, location, location.
There’s a reason it’s still one of the biggest factors in real estate.
Two nearly identical homes can have very different values simply because of where they’re located.
Things like:
- Neighborhood demand
- School districts
- Privacy
- Lot size
- Views
- Nearby amenities
- Traffic patterns
- Future development
all influence what buyers are willing to pay.
That’s true whether the home is in Auburn, Opelika, or one of the many wonderful communities throughout East Alabama.
Appraisers Don’t Use Price Per Square Foot Alone
One of the biggest misconceptions is that appraisers determine value by multiplying square footage by a dollar amount.
They don’t.
Professional appraisers compare similar homes that have recently sold and then make adjustments for differences such as:
- Size
- Age
- Condition
- Updates
- Lot characteristics
- Garages
- Pools
- Outdoor living spaces
- Overall appeal
This process creates a much more accurate picture of a home’s market value than a simple price-per-square-foot calculation ever could.
So… Is Price Per Square Foot Useless?
Not at all.
It’s actually a valuable tool when it’s used correctly.
Real estate professionals use price per square foot to identify market trends and compare similar properties.
The problem comes when it’s treated as the only factor in determining value.
Every home has its own story.
Every neighborhood is different.
Every buyer values different features.
That’s why pricing a home is both a science and an art.
The Bottom Line
Pricing a home isn’t about finding a magic number and multiplying it by the square footage.
It’s about understanding how buyers see your home in today’s market.
A well-priced home often attracts more interest, generates stronger offers, and creates a smoother selling experience.
On the other hand, pricing too high because of an oversimplified price-per-square-foot calculation can cause a home to sit on the market longer than necessary. As time passes, buyers naturally begin to wonder why it hasn’t sold, and that can make achieving your desired price even more challenging.
That’s why I prepare a Comparative Market Analysis (CMA) for every seller. A CMA looks beyond square footage to evaluate the things buyers actually pay for—location, condition, updates, amenities, lot characteristics, and recent comparable sales.
Our goal isn’t simply to tell you what your home is worth.
Our goal is to help you price it strategically so you can attract the right buyers and maximize your opportunity in today’s market.
Have a question you’d like us to explain?
Send it our way! Your question could inspire a future edition of Real Estate Explained. Whether you’re buying, selling, investing, or simply curious about the market in East Alabama, we’re here to help.
