Nearly all residential real estate agents in the US are commission-based independent contractors, not salaried employees. Agents are required to operate through a licensed real estate brokerage that must comply with many laws, especially consumer protection. In California one must have a current California real estate license or law degree to be compensated for selling property.

We are paid a commission that is generally percentage of the value of the house. The Sellers typically agree to pay the commission at close of escrow - when the home legally has changed ownership.

In the San Francisco Bay Area the total commission is generally 5-7%. The commission is usually split 50/50 between the Sellers' broker and the Buyers' broker. It's common to see a 5% total commission and 2.5% to each broker. The broker keeps a portion of the commission and pays the balance to the agent. Usually a client only deals with the agent, not the broker.

The agent's commission is then used to run their business: license fees, memberships in MLS and trade associations, advertising, marketing, communications, technology, transportation, professional attire, etc. In the end an agent will earn between 1.5-2% of the sale price and pay out about 25-33% in business costs. Some agents do much better and many fare far worse.

Since the agent is working for free for a client for weeks, months or sometimes years, the relationship is built upon trust, integrity and professional behavior. The best agents build their success upon referrals from past clients. Satisfied clients are literally golden.

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