How Do Agents Get Paid?

In the State of Colorado, the Brokerage Firm is paid, then the Agent is paid from the Brokerage Firm.  Depending on which Brokerage Firm the agent chooses to work with (Usually as an Independent Contractor), is dependent upon how much they pay the firm.

All fees are negotiable.  There is no such thing as a “Standard Fee”, in fact that is an illegal term considered as Anti-Trust, as it is deemed as price-fixing.

Here are the options for your agent to be paid:

  • Success fee-based on a successful closing. Paid by the Buyer or Seller at closing.
  • Retainer Fee
  • Hourly Fee
  • Bonuses and Incentives-Offered by Builders or Sellers
  • Referral fees – When you need a reputable agent in another place, then we can refer you to another agent anywhere in the world. Once you consummate that deal, we receive a referral fee for making the introduction and sometimes maintaining a healthy relationship.

Common Myths:

  1. Agents work on salary plus commission.   A lot of agents are Independent Contractors and work solely on commission, and/or success fees.
  2. All agents make more than 6 figures each year.   10-20% of the agents close 80-90% of the business in any market.  Of the 6 figures that are earned by top agents, anywhere from 1 to 45% can go to the lead ‘brokerage house’ where the agents hang their license as an Independent Contractor.  After paying the lead broker, then possibly 30% or more goes to the IRS.  So, essentially, sometimes agents are working for 1% – minus marketing, cost of business, etc…
  3. Agents close all Buyers and Sellers they work with.   The best agents have a 97% close ratio to appointments.  The average is 80%, and that can go down exponentially for newer or less experienced agents.
  4. All agents are full time.   Again, 10-20% of the agents close 80-90% of the business in any market, meaning these people are usually full time.
  5. All agents are REALTORS®.   REALTORS® maintain a higher standard of ethics and can be fined or ejected from their Board of Realtors®.  Not all agents are Realtors®, but all Realtors® are agents!
  6. Agents receive money or “kickbacks” from Title Companies, Lenders, Inspectors, or other vendors. FALSE! And illegal!  Unless it is disclosed that your agent is also an owner or has a marketing agreement with a Title Company or Lender (very rare these days), the agent is working for the success fee only!  No extra, hidden, income!