Real estate agents make money by representing both buyers and sellers in a transaction. Their fees vary greatly depending on the market and the area, but they typically range from 5% to 6%. Listed properties in Los Angeles generally receive a 5% commission. Some agents are willing to work for free, or at a reduced rate. This is called dual agency. While it may seem like a big deal, dual agencies are not legal in all states.
While the NAR has more than 1.5 million members, not all of them are licensed. About 65 percent of NAR members are licensed sales agents, while only 22% are licensed brokers or broker associates. Although anyone can use the word “realtor” as part of their name, it must be affiliated with the NAR. That way, they can lobby the government on behalf of their members. They also work on policy development and grassroots advocacy, and engage in NAR’s Consumer Advertising Campaign to educate consumers about the profession.
While most people are unaware of this, compensation for real estate agents must come from somewhere. After all, the office furniture, copy machines, and yard signs don’t pay for themselves. So, it makes sense to ask: how can a real estate agent earn enough money without paying for them? And if the compensation is so high that you can’t afford the services provided, why would you want to work for free? Thankfully, there are many ways to avoid the pitfalls of dual agency.