The U.S. housing market has been experiencing record booms in the past few years, and Washington is no exception. REDFIN reports that the average home price in Washington experienced a 14.1% increase year-over-year between 2020 and 2022. During that same period, REDFIN reports a 9.5% year-over-year increase in the number of homes for sale.
With the real estate wave sweeping Washington, buyers and sellers may wonder, When does a real estate broker earn a commission in Washington? After all, you may be wondering if (and when) you’ll have to cut a check to your real estate agent. People with second thoughts may worry that they will have to pay their real estate agent if they back out of the deal. So it can be helpful to know that real estate agents typically only receive a commission if the transaction goes through.
Having an experienced real estate attorney on your side helps you negotiate a lower real estate commission. A real estate lawyer can also help protect your rights at all stages of the transaction.
We have over 50 years of combined experience practicing real estate law in the great State of Washington. Our clients benefit from our wealth of knowledge and unique, effective approach to practicing law. We don’t believe that there is such a thing as a typical transaction. We understand that every person is different. To the best of our ability, we tailor approaches to fit the situation. We also strive to achieve the simplest, most effective solution for our clients when disputes arise.
So Exactly When Does a Real Estate Broker Get Paid?
The real estate broker earns their commission by helping buyers find their dream homes and assisting sellers in selling their homes. The real estate broker receives their commission when the closing occurs. This means that the real estate brokers typically don’t get paid unless the transaction goes through successfully. For this reason, the real estate brokers have a vested interest in helping ensure that the transaction goes through.
How Is the Real Estate Commission Paid?
The real estate commission is taken out of the home sale price. In that sense, the commission isn’t an added cost—it’s already part of the purchase price. The real estate brokers receive a check once the home sells. The buyer and seller’s realtors typically split the commission. So, if the contract says the real estate brokers get a 5% commission, each agent might get 2.5% of the home’s final purchase price.
Keep in mind, though, that you typically won’t have to write a check for this amount. In most cases, this happens while everyone is at the closing table. If you’re using a title insurance company, then they will handle the money distributions. They’ll either cut a check and hand it to brokers or wire the money to them.
Note that the respective real estate firms receive the check for the realtor fee. The real estate brokerage firm and the individual agent or realtor may divide up the commission check. Let’s say that the real estate commission is 5%. The buyers’ real estate brokerage firm may receive 2.5%. The brokerage and the agent who handled the transaction may each receive a portion of that figure.
What Is the Average Real Estate Commission?
The percentage that the real estate broker receives can vary. After all, it’s whatever the parties agree to in the contract. That said, the typical range for real estate broker commissions is between 5% and 6%. Therefore, if your home costs $300,000, the real estate broker may receive between $15,000 and $18,000 in commission.
At Blado Kiger Bolan, P.S., we take a straightforward approach to real estate law. We put people first, leveraging the power of teamwork in everything we do. We advocate for our clients and help smooth the home buying and selling process. If disputes arise, we leverage our decades of litigation experience to help protect our clients’ rights.
What Determines the Real Estate Commission a Broker Receives?
Ultimately, the parties agree on the percentage that the real estate broker receives in commission. When the buyer exchanges offers with the seller, part of what they’re negotiating is the commission. Additionally, you negotiate other contract terms, like the purchase price.
It’s common to wait to contact a real estate lawyer until after you and the other party sign the contract. While this may save you time in the short term, you may end up agreeing to unfavorable terms—and it can be hard to back out at the last minute. For example, sellers may agree to pay the broker a higher commission than what is reasonable under the circumstances. The best way to protect your rights is to contact an experienced real estate lawyer sooner rather than later.
Blado Kiger Bolan, P.S.—Experienced Attorneys Tacoma, WA
Even if it’s not your first time buying or selling a property, it’s essential to have a real estate attorney in your corner. They help you by drafting and negotiating the contract, thereby setting you up for success from the start. They also review important real estate documents, like the title, chain of title documents, and deed.
A good attorney has your best interests at heart and anticipates problems before they arise. They help their clients prepare for almost everything, staying one step ahead of the game. With real estate, things can change fast. Unfortunately, these changes can jeopardize the deal. You need a law firm that is agile, prepared, and responsive. Blado Kiger Bolan, P.S. is that law firm.
We pride ourselves on our collaborative and responsive practice. Because we handle real estate transactions and litigation, we have a pretty good grasp of what could go wrong. You can benefit from this because we can help you prepare for almost anything that may come up during the transaction. If things do go south, we’re equipped to defend your rights in court.
Clients describe our lawyers as superb, professional, sympathetic, and outstanding. We would love to help you on your real estate journey. Contact us today to schedule an initial consultation with a member of our legal team.