Purchasing or selling a property can be complicated and stressful. Estate agents play an important role in this process; nevertheless, many individuals are confused about when and how estate agents are paid.

The first thing to remember is that estate agents usually work on a commission or a fixed fee charge. This means that they are only compensated if they successfully sell a property or assist a consumer in purchasing one. The payment is typically a percentage of the final sale price, which might vary based on the estate agent and the location in which they operate, or it is a fixed fee charge set by the estate agent, as shown below.

When does an estate agent get paid?

When an estate agent successfully sells a property, their commission is usually paid after the sale has been exchanged and completed. This means they will not be paid until the deal is legally finalised and the money is delivered to the seller. The estate agent’s commission is normally deducted from the seller’s proceeds of the transaction.

The estate agent will not be paid if the property does not sell. However, they may still be entitled to expenses made during the selling of the property, such as advertising fees.

Different ways an estate agent can get paid

Depending on the agreement they have with their customer, an estate agent might be paid in a variety of ways. Among the most typical payment plans are:

Sole agency agreement:  The estate agent is appointed as the exclusive agent for the sale of a property. The estate agent is entitled to the commission if the property is sold during the term of the agreement.

Multiple agency agreement: When a property is advertised with many estate agents, the commission is split among them if the property sells.

Fixed fee agreement: The estate agent promises to sell the property for a certain fee regardless of the final sale price. This sort of arrangement is gaining popularity, especially for lower-value homes.

By understanding how estate agents are paid, you can make educated decisions when buying or selling a property and ensure that you have a comprehensive grasp of all costs involved in the process as well as the various payment options that can be agreed upon between the estate agent and their client.