Demystifying the Word “Commission” in Real Estate

Image via Home Real Estate of Kearney LLC

The Head of Business Development at 4 Stories, the Marketing and Consulting Division for New Developments at LG Fairmont, Leah Azizian discusses about how “commission” is a word that gets thrown around A LOT in the real estate field…

Whether it’s by:
– Starting agents who don’t fully understand how much commission/money they will make
– Clients who like to use our commission as a negotiating tool/tactic toward a price they should accept
– Seasoned agents who like to “advertise” their earnings

Therefore, Leah figured that it’s about time that we break down how much money real estate agents actually make – not out of “spite”, but to provide some more clarity around this term.

So let’s say we’re looking at a property that is $800,000. The average commission in New York City is about 5% to 6% of the purchase price. Six percent of $800,000 is $48,000 gross commission.

  1. A majority of your deals will be co-broked. The first thing to keep in mind is that 90% of the time, you are co-broking your deals with another brokerage.
    • 50% of the gross commission will be split amongst 2 brokerages.
      • So the $48,000 will get split down the middle amongst both sides.
      • That leaves your brokerage with $24,000 (that is how much your brokerage takes).
  2. There is another split within your brokerage based on what you negotiate with them.
    • So take 50% — 50% of $24,000 which will leave you $12,000 (your net commission).
  3. You will be splitting your net commission accordingly with whoever you partner with.
    • Could be your colleagues
  4. Your partner/colleague will be deducting marketing expenses. This goes for:
    • Photography
    • Videography
    • Listing platform expenses
  5. You will also have your taxes to keep in mind.

Don’t get caught up with all the glamour and glitz that you see. Your net commission is usually about a quarter (1/4) or 1/3 of the gross commission.


Leah has also cleared up misunderstandings from clients who made comments or had questions below. Hopefully some of these questions answer yours!

  1. People always tend to grab big numbers by guessing…
    • Leah: Always… the gross numbers by us tend to get marketed frequently, leading to lots of misunderstandings. Time we clear things up!
  2. Great post! A vendor/supplier should never have to break down their numbers for their clients. If the client doesn’t trust you, then he’s not a right fit for you. Of course there are always basic negotiations guidelines, but to get down to your actual numbers? Never!
    • Leah: Agreed, precise/actual numbers should never be disclosed. This post was meant more on the conceptual side, for people to see that there’s more beyond the gross numbers. It is easy to calculate a 5-6% commission. But in reality, that’s not what we take home…
  3. On behalf of all realtors, thank you Leah! It’s imperative that the public understands the commission structure, perhaps it will bring more clarity and perception to light.
    • Leah: Agreed, there are plenty of more conversations to be made…

If you have any questions for Leah regarding New Developments, learning more about the real estate field, or even working in the real estate field, please reach out to her via LinkedIn or lazizian@lgfairmont.com!
LG Fairmont is hiring a Licensed Real Estate Salesperson and if you have an entrepreneurial mindset, then you may be the ideal candidate. Don’t miss out on this great opportunity!

Sales Tips and the Number One Mistake Sellers Make

Like many of you, Leah Azizian (The Head of Business Development at 4 Stories, the Marketing and Consulting Division for New Developments at LG Fairmont) get a ton of messages where people just automatically pitch their service or product before saying hello or introducing themselves — it is something that everyone will see more and more as LinkedIn grows.

Image via Process.st

Leah’s Sales Tips

According to Leah: As a real estate advisor, the word SALESPERSON has always invoked mixed feelings. It may come off as a surprise to many of you, but I think it gives off an impression that we’re just there to make money and that we’re there to sell you. Which is why I think salespeople usually have a bad reputation of being dishonest. Ultimately, I think it overlooks all the time, attention, and care that we put into every single relationship and deal that gets across the closing table.

When pitching your product, it’s super important to:

1. Understand whether your product or service is even suitable to that person. That person may just get automatically turned off because that product is just not attractive or appealing to them. And I think you have to keep in mind that it may not be attractive to them, but it may be attractive to a friend or a family member.

The best thing to do is to…

2. Try a build a relationship with this person that you are speaking with — even if it’s over messaging. They may not be a client — but their friend, sister or brother may be. Be curious. Be genuinely interested about the person. You know, you see them in a certain type of field — ask about it. Ask what inspired them to get into that field.

Important Note: Try and build some type of thread of relatability because once you it’s SO much easier to tell them about you and who you are, how you can grow your business together and just network with more people.

People just tend to forget this and if it’s not a way of doing business in real life, it’s definitely not a way of doing business over messaging.


Leah also highlights the importance of the POWER OF COLLABORATIONS. This doesn’t just apply to those who are in the real estate field, but wherever. If you are in the sales field, you understand that there is this stereotype that exists.. that negotiations have to be really aggressive and pushy and dominant in order to make it happen.

This stereotype couldn’t be any more wrong. Don’t get it twisted — negotiations don’t have to be aggressive to be successful.

You will see when you get into sales — that the best negotiations and the most successful deals where the best value is achieved, is usually when both sides work really well with each other and they respect each other, and they can get creative and collaborate to make both sides happy while still respecting the fiduciary duties and the client confidentiality.

There is a power of collaboration that exists throughout all sales industries. We see this in the real estate field, that when both brokers can work well with each other and RESPECT each other, it opens up a world of opportunity — to creativity, happier clients (on both sides of the table) and greater value achieved overall.


The Number One Mistake Sellers Make

  • They price their homes far above the market rate
  • To make things even worse, they drop the price of their homes in increments instead of doing one major price drop

What Leah means by this is:

Exhibit A: Home in the Upper West Side

  • Started at $2.94 million
  • Dropped to 2.595 million over a span of several months
  • Timeline: Decreased 0%, Decreased 1%, Decreased 4%, Unavailable, Relisted, Decreased 2%, Decreased 6%

Exhibit B

  • Started at $4.9 million
  • Dropped all the way down to $3.9 million

The best practice is to stop overpricing! Selling a home can be an emotional roller coaster, and when it comes to pricing a home, we often find that sellers tend to lean toward pricing a certain way. The mistake mentioned above is what should be avoided!


If you have any questions for Leah regarding New Developments, learning more about the real estate field, or even working in the real estate field, please reach out to her via LinkedIn or lazizian@lgfairmont.com!
LG Fairmont is hiring a Licensed Real Estate Salesperson and if you have an entrepreneurial mindset, then you may be the ideal candidate. Don’t miss out on this great opportunity!