Real estate transactions involve many different parties, from buyers and sellers to agents and brokers. One of the most important factors in any real estate deal is the commission that is paid to the agents or brokers involved. In this article, we'll take a closer look at when a commission is due in a real estate deal.
Commission Agreement
Before any work is done on behalf of a client, real estate agents and brokers typically enter into a commission agreement. This agreement outlines the terms of the commission, including the percentage of the sale price that will be paid as commission and the conditions under which the commission is due.
Listing Agreement
In a real estate transaction, the listing agreement is the contract between the seller and the listing agent. This agreement sets forth the terms of the sale, including the asking price and any conditions of the sale. It also typically includes a provision for the payment of the commission to the listing agent, which is due upon the successful sale of the property.
Buyer's Agent Agreement
When a buyer engages the services of a real estate agent, they typically enter into a buyer's agent agreement. This agreement sets forth the terms of the relationship between the buyer and the agent, including the commission that will be paid to the agent upon the successful purchase of a property.
Closing the Deal
Once a real estate transaction is complete, the commission is typically due to the agents or brokers involved. The commission is paid out of the proceeds of the sale, with the seller's agent and buyer's agent typically splitting the commission according to their respective agreements with their clients.
Conclusion
Understanding when a commission is due in a real estate deal is important for all parties involved. By entering into clear and detailed agreements with agents and brokers, sellers and buyers can avoid conflicts and ensure that everyone is compensated fairly for their work in the transaction.
