In the North Atlanta area of Georgia, I find that many people are unclear, even frustrated, regarding real estate commissions.  I get the following questions regardless of whether one’s selling a home or buying a new home:

Who pays real estate commissions, the home buyer or the home seller? 

What are they for?

When are they paid?

How much are they?

So, let’s break it down, one by one.

Who Pays Real Estate Commissions? 

In the state of Georgia, it is customary for the SELLER of a home to pay the TOTAL real estate commissions.  Although the amount is negotiable, the total is determined in writing at the time of listing the home for sale with a real estate professional, as well as, how much of the total is going to be offered to the Broker/Agent who brings the Buyer. This latter amount (Buyer side commission) is also shown in writing in the Listing on the Multiple Listing Service (MLS) for the area.       

What Are Real Estate Commissions For?

Real estate commissions pay for many different expenses related to selling a home.  Items include Listing and Selling agent wages, their broker “splits” (anywhere from 0-50%, depending on many factors), the agent’s payroll taxes, MLS fees (about a $1,000 on an average priced home in Fulton or Forsyth county), marketing and advertising expenses, errors and omissions insurance, auto fuel and maintenance, photography, signage, lockboxes/software, open house expenses, and others. 

Real estate agents do not get paid a salary nor an hourly wage.  Their sole income is derived from real estate commissions and they are responsible for all their expenses, in most cases.

When Are Real Estate Commissions Paid?

Real estate commissions are paid at closing (when the parties meet at an attorney’s office and sign all the paperwork) and come from the home seller’s proceeds. 

Real Estate agents do not get paid for their time, work nor expenses until a home closes.   If a property does not sell (close) no real estate commissions are paid, unless agreed to in writing at the time of listing the home for sale.

How Much Are Real Estate Commissions in the State of Georgia?

There is not a set, locked-in percentage nor dollar amount for real estate commissions in the state of Georgia; it is completely negotiable.  That said, it is customary for full service brokers to ask the home Seller to pay a TOTAL of 5.0-7.0% of the agreed to Purchase Price of the property in real estate commission.  In most cases, the Listing agent will then offer 3.0% of the TOTAL to the Broker who brings the buyer, keeping any difference for their Broker.  In fact, as of the time of this writing a full 95.7% of all Forsyth county listings in FMLS (1,406 residential detached homes) offered the Buyer Broker three or more percent in commission.  Remember, this must be in writing and shown in the MLS listing.  So, as one can deduce, real estate commission discounts negotiated between a home seller and the Broker/Listing Agent almost always come out of the Broker/Listing Agent’s pocket, not the Buyer Broker/Agent’s.

When dealing with discount brokers, it is important to understand how much the TOTAL commission is as many advertise only their portion.  For example, some companies lure in unsuspecting home sellers by offering a “1.0% home listing commission” or flat fee.  What you will find out when you dig deeper is that most will still recommend offering the customary 3.0% to the Broker/Agent who brings the Buyer for the property.  Additionally, you may be required to pay separately for MLS fees, signage, etc., so shop carefully.

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By Mark Panetta of Solid Footing Realty. Contact (678) 266-8062.

Solid Footing Realty is a Keller Williams Realty Community Partners affiliate and was started in 2015 by Mark Panetta.  Mark is a North Atlanta Listing Specialist, REALTOR®, Accredited Buyer Representative (ABR®) and Military Relocation Professional (MRP®). He specializes in helping you improve your financial stability in the decade before retirement by “right-sizing” your house at the appropriate time.  He also works to help first time home buyers achieve the respect, freedom and pride of home ownership.