Where Your Commission Really Goes

Errors & Omissions insurance is professional liability coverage every licensed broker is required to carry. It protects you, the client, in the rare case something goes wrong in a transaction. It's a flat cost out of my pocket on every closing, whether it's ever used or not.

Washington's Business & Occupation tax is a state excise tax on my gross business income — charged before any expenses are deducted, unlike a typical income tax. It runs 1.5% of every commission, straight off the top.

My state business license fee, required to legally operate as a licensed broker in Washington.

Washington requires ongoing coursework to keep a broker's license active. I put 30 to 60 credit hours a year into staying current on contracts, disclosures, and changing law — time that's spent before it ever touches a transaction.

As an independent contractor, I'm responsible for my own self-employment and business taxes. On top of ordinary income tax, self-employment tax runs 15%+ of net earnings — covering both the employer and employee share of Social Security and Medicare that a W-2 job would split with an employer. There's no withholding happening in the background; I set aside and file for all of it myself.

A 5% cut of every commission that covers office overhead, transaction management software, and administrative support — the systems that keep your file organized and moving from contract to closing.

A flat fee that covers compliance review on every file — a second set of eyes confirming your paperwork, disclosures, and deadlines are handled correctly and protect you legally.

A monthly fee to my office, paid whether or not anything closes that month — one of several fixed costs running in the background of this business every single month.

A portion of every closed transaction goes to the Windermere Foundation, which supports local nonprofits serving children and families facing homelessness, hunger, and abuse in the communities I work in. It isn't optional — and it's one of the things I appreciate most about this brokerage.

For every listing, I hire a professional photographer. Good photos are one of the highest-return investments in getting a home noticed online, and it's not a corner I cut.

Yard signs, riders, and directional signage — ordered, installed, and eventually removed — are a direct cost on every listing.

Printed property flyers and info sheets for showings and open houses are designed and printed at my expense.

Every listing gets its own property website and syndication across major real estate search sites — a cost that comes out of my marketing budget, not yours.

Staging consultations, and sometimes staging furniture itself, are costs I often absorb or subsidize to help a home show at its best.

When I recommend a pre-listing inspection to get ahead of surprises before a buyer's inspection, that cost is often one I cover to protect the timeline and the sale.

Every showing, listing appointment, inspection, and vendor meeting means driving — often across South King and Pierce County. Gas and vehicle wear are real, out-of-pocket costs of the job.

Beyond the cost of driving, there's the time itself — hours spent behind the wheel getting you to and from homes, appointments, and inspections that don't show up anywhere on a fee schedule.

Every CMA, market report, and pricing analysis takes hours of research most clients never see — pulling comps, tracking absorption rates, and making sure a price or offer is grounded in real data, not a guess.

Before we ever sign anything, there's time spent understanding what actually matters to you in a home or a sale — not just what fits a search filter. That relationship-building time is never billed, but it shapes every piece of advice that follows.

Membership in the Northwest Multiple Listing Service — the database that makes it possible to list, search, and show property across the region. Nothing gets marketed or found without it.

Membership dues with the Tacoma-Pierce County Association of Realtors, required to hold the Realtor designation and access to the MLS and standard forms I use on every contract.

Access to the electronic lockbox system that lets buyers' agents securely show my listings — a recurring monthly cost regardless of how many showings happen.

Transaction management, CRM, e-signature, marketing, and design tools — the everyday software that keeps your file, your communication, and your marketing running smoothly. It's a stack of recurring subscriptions I maintain year-round, whether or not a transaction is active.

Office supplies, notary and errand costs, closing gifts — the smaller expenses that rarely get talked about but show up all year long.

It's a fair question to raise — this is one of the biggest financial decisions you'll make, and every dollar matters. But it helps to understand what actually moves when the percentage does.

Almost everything above this line doesn't change with the commission rate. E&O insurance, my business license, MLS and association dues, software subscriptions, the office charge, self-employment tax — those are fixed costs of doing business, paid the same whether the commission is 3% or 2%. A lower rate doesn't lower my expenses. It lowers what's left over after them, which is the same place marketing budget, time for research and negotiation, and my own pay all come from.

That doesn't take the conversation off the table. It just means a reduced fee usually shows up somewhere — less invested in marketing your home, less time available for negotiation and research, or less left over for the work itself. I'd rather talk through that honestly upfront than have it quietly show up later as a corner cut you never see.