How Does Real Estate Commission Work in Florida?

The Listing Agreement Determines the Real Estate Commission

When listing your home for sale with a real estate agent, you will sign a listing agreement.  A listing agreement is a contract between the homeowner and the real estate agent’s brokerage that will lay out the commission rate.  While some agents charge a flat fee, most real estate commissions are a percentage of the sale price.  In order to place the listing on the multiple listing service, the seller must agree to offer a commission to the agent that represents the buyer purchasing the home.

The Listing Agent Splits Commission with the Buyer’s Agent

Technically, the listing agent agrees to share a percentage of their commission with the buyer’s agent, and this split is approved by the seller in the listing agreement.  Usually, the commission is split evenly between the two agents involved in the transaction.  However, the seller may decide to pay the buyer’s agent a higher commission to attract more interest in their home.  A higher commission often motivates a buyer’s agent to show the home more frequently to their buyers.  This can be a good strategy in a buyer’s market where the seller is competing with multiple other listings in the neighborhood.

Agent Expenses

While the real estate commission rate is negotiable, the average rate in Florida is 6% of the sales price.  If you sell a $250,000 house, you would pay a $15,000 commission at 6%. This might sound like a lot, but remember that the listing agent will cover marketing expenses which can add up quickly.  If you negotiate a lower commission, the agent might cut corners on marketing to make up for the loss.  The agents involved in the transaction will usually have to pay their brokerage a percentage of the commission and will be responsible for taxes and other operating expenses.  An agent only earns a commission when a property closes so they are not compensated for the work performed on deals that fall through.