When do real estate agents get paid their commission?

Most sellers factor the commission into the asking price, so it could be argued that the buyer always pays at least part of the commission, either directly or indirectly (through a higher purchase price). Both the seller's agent and the buyer's agent have agreements with their sponsoring brokers that specify the agent's cut of the commission.

It can be a 50/50 split between the broker and the agent or any other split they choose. Real estate commissions are often divided among several people, including the:

• Listing agent (the agent who took the listing from the seller)

• Listing broker (the broker who employs the listing agent for the seller)

• Buyer's agent (the agent who represents the buyer)

• Buyer's agent broker (the broker who employs the buyer's agent)

Commissions are generally paid only when a transaction settles. There are instances, however, when a seller is technically liable for the broker's commission even if the sale doesn't close, and often the terms specifying this requirement are in the listing agreement.

This situation is rare, but it could happen. For example, if the broker has an offer from a buyer who is ready and able to make the purchase, but the seller does any of the following:

• Changes their mind and refuses to sell

• Has a spouse who refuses to sign the deed (this is only applicable if the spouse signed the listing agreement)

• Has a title with uncorrected defects

• Commits fraud related to the transaction

• Cannot deliver possession to the buyer within a reasonable time

• Insists on terms not listed in the listing agreement

• Mutually agrees to cancel the transaction with the buyer

Most real estate agents are paid on a commission-only basis, but there are certain agents, like those employed by private companies (e.g., Redfin), that will get a base salary plus a bonus.