For real estate agents, it's: no performance, no pay.

  We often hear a seller of real estate speak of "hiring" an agent. Loosely speaking, the seller may "hire" an agent, but technically the agent remains an independent contractor. The contract between the two parties specifies this contractual relationship versus an employer-employee relationship. As the word "agent" implies, the agent acts in the seller's best interest but is not the seller's employee.

  If the agent were "hired," he or she could also be "fired." Again, this is true only in a broad sense, but not technically. Just as it takes both parties to enter into a contract -- a listing agreement -- it takes both parties to terminate the contract by mutually agreeing to do so. A seller should bear in mind that he or she is obligated to pay the broker's commission if the property is sold during the term of the listing agreement, and that the broker is entitled to his commission under some circumstances even after the expiration of the listing. This is the broker's "protection period."

  The seller and his or her agent should go over the contract together and know each other's obligations before signing. Once signed, the listing agreement is a legally binding contract that can be enforced under state laws. Do not lightly enter into a contract. If you wish to terminate a listing agreement, talk with your broker and try to mutually agree to terminate.

  As the seller's agent, the broker (and broker's agent, if any) will be paid a commission as a percentage of the selling price of the property. However, it is the broker's duty under the listing agreement to procure a buyer who makes an offer acceptable to the seller, and to shepherd the transaction up to the moment of closing by an attorney. Until that moment the broker (and any agent) is/are working for free, and taking a risk that he or she will be able to take the transaction to closing. Only at closing does the seller's agent get paid. The commission is paid to the listing broker, who may share it with an agent of the listing broker or with another broker, the selling broker. 

  The agent gets paid for performance, not for time spent working with the seller and buyer. Many cases exist of agents being able to put a property under contract with a buyer within one or two days of taking the listing, and closing the deal in less than one month's time. It might seem to the seller that the agent did not put much time or effort into the transaction and, therefore, has not earned a full commission. But the agent does not get paid for his or her time. The agent is paid for performance. Even when the deal gets closed in short order, the agent has earned the commission by performing his or her duties under the contract.

  Remember that sales commissions are negotiable, and a seller may want to talk with the agent about a flexible fee arrangemnt. Michael Dixon Realty is open to working for a full commission for full service or a partial commission for performing only some duties, letting the seller perform others. For example, the seller may want the agent to advertise the property and procure qualified buyers to look at it, but the seller wants to show the property and negotiate an agreement with a buyer. Once an agreement is reached, the agent would prepare the Purchase and Sale Agreement according to the terms agreed to by the buyer and seller, get the necessary signatures, and schedule a closing with an attorney.

  Michael Dixon routinely offers to work for a lower commission rate if he procures the buyer himself and does not have to split the commission with another company. In that case Michael handles both the buyer's and seller's sides of the transaction, and does so for less than the full commission. Conditions apply, but this option is available to the seller in most cases.  

  As a reminder, the real estate agent gets paid only for performance, not time spent.