The market commission these days is 6%. On a sale of a $350,000 property the commission is about $20,000 (rounded down a bit for simplicity).
I admit this is a significant chunk of change. So, is your agent putting ALL of that in his or her pocket, taking a luxury vacation, or buying new car or boat with it? No. Not even close.
There is about a 75% chance they will have to split it another agent who is working with the buyer. So there goes half of it.
The agent then splits the rest of it with their broker. Split plans varies among brokerages, The broker gets anywhere from 0 to 50% of the gross commission. The difference usually depends on the amount of support the agent gets from the brokerage, such as advertising, training, leads, legal support and so on. A typical split is about 20% from the agent to the broker of the first $100,000 of gross commission. The broker has expenses too, like rent, auto and gas, wages for support staff, Advertising and so on.
Agents are independent contractors. Many, like myself, are even incorporated. They operate like small businesses and there is significant overhead. After the split with our broker we pay for things out of pocket things like gas, insurance, board dues, licensing fees, telephone, education, advertising (both property ads and self promotion).
In the above example $20,000 is a significant amount of money. But we are tasked with bringing the seller a ready willing and able buyer with the $350,000 it takes to buy the property. Then getting them and the seller though the increasingly complicated closing process.
Commissions are negotiable usually. Keep in mind that a the difference between a 6% and a 5% commission is just 1% to the seller but it is a 17% percent reduction to the agent (1/6 equals 0.169). If the homes in your neighborhood are mostly offering 3% to the buyers agent and yours is only offering 2.5% you will get less traffic to your listing.
Developers offer as much as 6% to a buyers agent on their new construction projects because they understand how much the commission affects traffic. This is what you are competing against. Try to think of the commission not so much as an expense, but an incentive for agents to bring you buyers. More traffic to your listing means more offers, and more offers means more money in your pocket.
Related:
What Does It Cost To Sell A Home In Florida?
3 Steps To Get Top Dollar For Your Home
Serving The Greater Fort Lauderdale area since 2006
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