How Do Realtors Get Paid?

One question I hear often from buyers and sellers is: “How do realtors actually get paid?”

There are a lot of misconceptions about commissions, who pays them, and what agents actually do to earn them. Understanding how it works can help you make better decisions when choosing an agent.

Here’s a simple breakdown of how realtors get paid and what happens behind the scenes.

Buyers Don’t Pay Realtor Commission

One of the biggest surprises for many buyers is that they don’t pay their agent directly.

In most real estate transactions, the seller pays the commission. This commission is typically a percentage of the final sale price of the home.

The seller agrees to pay their listing brokerage a commission, and that commission is usually shared with the agent who brings the buyer.

This means buyers can work with an agent who represents their best interests without paying out of pocket for the service.

Why Buyers Should Have Their Own Agent

Another common misunderstanding is when buyers contact the listing agent directly to book a showing.

It’s important to understand that the listing agent works for the seller. Their job is to get their seller the highest price and most favourable terms.

As a buyer, it’s beneficial to have your own agent representing you. Your agent will negotiate on your behalf, help you understand the market, and work to get you the best price and terms possible.

Having someone in your corner can make a big difference in the outcome of a deal.

When Is Commission Actually Paid?

Realtors only get paid when a transaction successfully closes.

The commission comes out of the seller’s proceeds at closing. The seller’s lawyer deducts the commission from the sale funds along with other expenses such as legal fees and tax adjustments.

If the home doesn’t sell or a deal falls apart, the realtor typically does not get paid, even if they have already invested significant time and effort.

Sometimes Deals Don’t Work Out

Real estate transactions don’t always go as planned.

I’ve worked with sellers in the past who found a home they loved and wanted to buy, but unfortunately they couldn’t sell their current home in time for everything to line up. The market can be challenging at times, and timing doesn’t always work out.

In that case, the clients decided to stay in their home for the time being. Situations like this are part of the reality of real estate—agents often spend significant time helping clients even when a deal ultimately doesn’t close.

What Does a Realtor Actually Do?

A good realtor does much more than simply show homes or put a sign on a lawn.

A professional agent should:

• Understand the local market and neighbourhood values

• Study recent sales and current competition

• Help determine the right price for buyers or sellers

• Negotiate on your behalf to get the best deal possible

• Connect you with trusted professionals like mortgage brokers, inspectors, and lawyers

• Spot potential red flags in properties

• Guide you through the contracts and paperwork

For example, understanding recent sales and current listings in a neighbourhood helps determine the true market value of a home. That knowledge can protect sellers from underpricing their property or buyers from overpaying.

Local Knowledge Matters

Working with a local realtor can make a big difference.

An agent who understands the neighbourhood, recent sales, and current competition can give you better advice when pricing a home or making an offer.

Real estate markets vary significantly from one neighbourhood to another, and having someone familiar with the local market can help you make more informed decisions.

The Bottom Line

Realtors are typically paid through commission from the sale of a home, and they only get paid if the deal successfully closes.

While many people focus on the commission itself, the real value comes from the experience, guidance, negotiation skills, and local knowledge a good agent provides throughout the process.

Buying or selling a home is a major financial decision, and having the right professional by your side can make all the difference.

If you're thinking about buying or selling in Kingston or the surrounding area, I’d be happy to help guide you through the process.