13 Ways Real Estate Agents Make Money on Your Deal

This post may contain affiliate links.

Many real estate transactions are a whirlwind of forms, showings, phone calls and deadlines orchestrated by your real estate agent. They handle the gritty details and make the complex process almost look easy. Behind the scenes, however, real estate agents have a lot of ways to make a living—and sometimes more than you think.

It’s eye opening to know how real estate agents earn their income. It’s not just about the commission check they get when you close. Agents have various revenue streams per deal — from referral fees to upselling services. Below, we take a closer look at how real estate agents get paid on your deal.

Upselling Home Staging Services

Some agents make more money by referring sellers to home staging services. The referral fee is small and they may have a preferred home stager. It’s a win for the agent and seller because staged homes sell faster and for more money. And as a bonus, if the agent has a referral arrangement, they may pocket a little extra cash.

Promoting In-House Mortgage Brokers

There are many real estate firms that will have an in house mortgage brokerage service. The agent or the brokerage can also get paid for directing the business if a buyer chooses to work with that agent’s in house lender. This can streamline the process for buyers and agents, but it’s also a way to fatten up the agent earnings a little.

Recommending Inspectors and Contractors

They often have a network of inspectors, appraisers and contractors to help get a property sale ready. They may make a referral fee when they refer clients to these services. It’s all supposed to make the transaction easier for the buyer or seller, and there’s often a financial incentive for the agent as well.

Commission From Sales

Commission from a sale is the bread and butter of real estate agent’s income. According to Bankrate, agents typically get a percentage of the home selling price (on average about 5-6%). The buyer’s and seller’s agents typically share this commission with each taking a percentage of the deal. On the face of it, that commission can really add up, particularly on more expensive properties.

Fee Charged for Advertising Properties

Why is my house not selling — Image Credit: Alexas_Fotos / Pixabay

In selling a property, agents may provide optional, premium advertising packages to the seller. This could be anything from professional photography to virtual tours, to paid ads on social media. These services cost the seller an extra fee, and the agent either does them himself or hires someone to do them. Either way, the agent could take a cut of these new services.

Holding Open Houses

Typically, real estate agents are expected to host open houses, but for others, it’s another way to meet new clients. The agent invites the public into the home and not only markets the property, but also can connect with potential clients that may be interested in other listings. And if one of those visitors decides to work with that agent, that’s a future commission in the making.

Other Agents Referral Fees

If a client is seeking to buy or sell property outside of an agent’s area, the agent will refer them to a trusted agent who works in the area. In this case, the referring agent will get paid a referral fee off the other agent’s commission (generally speaking, a percentage of their commission). It’s a way for agents to make a little extra without having to do any of the hands on work.

Charge Administrative or Transaction Fees

In other cases, there fee is an administrative or transaction fee charged by the real estate agent or their brokerage. The fee is intended to cover the overhead costs of managing the transaction – paperwork, office expenses, and other logistics – but need not be the 2 percent that many lenders charge. It’s a nominal fee and the agent’s cut gets added to it, without touching the commission.

Real Estate Investment

Investment Opportunity — Photo Credit: Pexels

Some agents have a little investment property experience, buying homes to flip or rent. Agents often have first hand knowledge about the off market listings and real estate deals, and can use this to their advantage to spot profitable properties. Personal investments can generate substantial income well beyond standard commissions.

Provide Property Management Services

Sometimes property management services are offered by agents to clients with rental properties. They’ll take on tenant relations, maintenance issues and other tasks for the landlord for a percentage of the monthly rent. It gives the agent a steady stream of income whilst keeping them in touch with the client’s real estate needs.

Offering Broker Price Opinions

Banks or lenders can get what’s called a Broker Price Opinion (BPO) from agents with experience. This is a report that estimates the value of a property, and is used for short sales or foreclosures. It’s a handy way to supplement income as an agent is paid for the time it takes to prepare BPOs, which is a good thing when market sales slow down.

Real Estate Education Workshops

Sometimes experienced agents will hold workshops or seminars for budding agents or homeowners. Market trends, buying strategies and tips for a new agent are examples of sessions that some of these meetings might be arranged to discuss. This not only expands the agent’s brand, but is also another revenue stream. If the agent has built a good reputation, attendees often pay a fee to attend these events.

Marketing and Lead Generation Resources for Sale

12 Biggest Financial Challenges Millennials Face Compared to Boomers — Image Credit: Ivan Samkov/ Pexels

Agents create and sell marketing resources or lead generation services to other agents. They could start building a following on social media and sell ads to real estate related businesses, or create guides and templates for other agents to use. If they know their stuff and are good with online marketing, this side hustle allows them to parlay their knowledge and experience.

Earn Through Ancillary Products

Mistakes That Are Secretly Ruining Your Home’s Look — Photo Credit: Shutterstock

In the end, real estate agents tend to endorse ancillary products such as moving services, home warranties and life insurance plans. If they can, they partner with companies and recommend their services and they earn a fee each time a client signs up. This is a subtle, but effective, way for agents to earn extra income without additional labor.

Disclaimer: This list is solely the author’s opinion based on research and publicly available information.