How Do Real Estate Agents Get Paid in Lagos? (Easy Guide)

by Bright Ugochukwu
Nov 8, 2024

Investing in real estate can be a game-changer for building wealth.

But before you dive in, one crucial question often arises: How do real estate agents get paid?

Knowing how agents earn their income is vital to making informed decisions if you’re buying, selling, or investing in property.

OK, let’s dive in!

Takeaways

Real estate agents in Lagos mostly earn their income through commissions, typically ranging from 3% to 6% on property sales and 5% to 10% on rentals.
In many transactions, commissions are shared between buyer and seller agents.
Most real estate agents in Lagos earn based on deals they close, with no guaranteed base salary.
Some agents charge flat or consultation fees for specific services.

What Is a Real Estate Agent’s Role in Lagos?

Before we get into how agents are paid, let’s clear up what they actually do.

If you’re unsure about what to expect when working with a real estate agent, our Ultimate Guide to Finding a Real Estate Agent in Lagos provides a comprehensive overview.

In Lagos, real estate agents serve as the middlemen between buyers, sellers, and property investors. Their job involves guiding clients through buying, selling, or renting properties.

They help negotiate prices, handle paperwork, and ensure that all processes are legally sound. The goal is to make your real estate transaction as smooth and stress-free as possible.

How Do Real Estate Agents Get Paid?

Real estate agents earn their income primarily from commissions, which means they are paid a percentage of the property’s sale or rental price.

However, their earnings depend on various factors.

These include the transaction type, the property’s value, and agreements between the agent and their client.

Real Estate Commissions: How They Work in Lagos

In Lagos, commissions are the most common way agents get paid.

These commissions are usually a percentage of the property’s sale price. They are often negotiated before the sale.

Pro Tip: Always negotiate your commission rate upfront. While standard rates apply, some agents may be willing to adjust their commission depending on the transaction’s complexity or the deal’s size.

For example:

If a property sells for ₦50 million and the agreed commission is 5%, the agent earns ₦2.5 million.

Here’s a breakdown of how these commissions work:

How Are Real Estate Commissions Calculated?

The commission structure for real estate agents can be calculated depending on the nature of the transaction:

a. Sales Transactions: In most cases, agents earn between 3% and 6% of the property’s sale price. The percentage can vary depending on the type of property and the location. Luxury properties in high-demand areas like Ikoyi or Lekki may have higher commission rates.

b. Rental Transactions: The commission is usually 5% to 10% of the annual rent for rentals. For instance, if the annual rent of a property is ₦3 million, the agent might earn ₦150,000.00 to ₦300,000.00.

c. Leases: In lease agreements, agents earn commissions based on the lease’s total value. This varies depending on the length of the lease.

Here’s a quick overview:

Transaction Type	Commission Rate	Example
Sales Transactions	3% – 6%	₦50 million sale, agent earns ₦2.5 million at 5% commission
Rental Transactions	5% – 10% of annual rent	₦3 million annual rent, agent earns ₦150,000.00 – ₦300,000.00
Lease Agreements	Varies based on the lease value	Depends on the total lease duration and value

A Table Showing How Real Estate Commissions Are Calculated

How Are Real Estate Commissions Shared?

Often, especially in larger deals, commissions are shared between multiple parties.

The agent handling the seller (also known as the listing agent) and the agent working with the buyer (the buyer’s agent) typically split the commission.

For example:

If the agreed commission is 5% and the property sells for ₦100 million, a total of ₦5 million will be paid. The buyer’s and seller’s agents may split this equally, earning ₦2.5 million each.

Who Gets the Commission? A Visual Breakdown of Lagos Real Estate Fees

What Happens When a Deal Falls Through?

One key point to note is that agents typically only get paid if the deal is closed.

This means that agents lose their commission if a sale or rental falls through at the last minute.

However, some agents might charge non-refundable deposits for their time, especially when dealing with high-value properties or difficult clients.

Pro Tip: If you’re working with multiple agents in a deal, it’s important to ask how the commissions are structured.

Other Compensation Models

While commissions are the primary way real estate agents get paid, some agents may also receive payment through other methods:

Flat Fees

In some cases, agents may charge a flat fee for their services. This is common when handling smaller transactions or short-term rentals.

Flat fees can range from ₦50,000.00 to ₦200,000.00, depending on the job’s complexity.

Consultation Fees

Some agents or brokers charge a consultation fee, particularly those offering specialized services such as property valuation or investment consulting.

This is typically a one-time payment for advice or guidance, often ranging between ₦130,000.00 and ₦250,000.00.

Do Real Estate Agents Get a Base Salary?

In most cases, real estate agents in Lagos do not earn a base salary. Their income is solely commission-based, meaning they only get paid when they close a deal.

However, some real estate firms may offer their agents a small retainer or stipend, but this is rare. Most agents rely on their commission as their main source of income.

Pro Tip: Some real estate firms offer a hybrid payment model that includes a base salary and commission. If you’re starting out as an agent, look for companies with this structure for more stable income.

Real Estate Agent vs. Broker vs. Realtor: What’s the Difference?

In Nigeria, the terms real estate agent, broker, and realtor are often used interchangeably, but they mean different things. Understanding these distinctions can help you navigate your transactions more effectively.

i. Real Estate Agent: This is anyone who facilitates buying, selling, or renting properties. They usually work for brokers or real estate companies.

ii. Broker: A broker is an agent with more experience who has met extra requirements and earned certifications. Brokers often run their own real estate businesses and oversee agents.

iii. Realtor: In countries like the U.S., “Realtor” refers to a National Association of Realtors (NAR) member. While this term isn’t used in Nigeria, it’s good to be aware if you’re dealing with international property.

When Are Real Estate Fees Paid?

Real estate agents usually get paid once a transaction is completed.

For property sales, this is after the buyer has made full payment and the property is transferred.

Agents get paid once the lease agreement is signed and the tenant makes the first rent payment.

Pro Tip: Make sure to set clear payment terms with your agent in the agreement. This will avoid any confusion about when fees are due and ensure smooth closing of the deal.

Are You Supposed to Pay Your Real Estate Agent Directly?

In Lagos, it’s common practice for buyers or tenants to pay agents directly, especially in rental transactions. The commission is usually deducted from the seller’s proceeds for property sales.

How Much Do Real Estate Agents Make in Lagos?

Source: Glassdoor

A real estate agent’s income can vary significantly based on experience, location, and the types of properties they handle.

a. Entry-Level Agents: Typically earn around ₦500,000.00 to ₦2 million per year, depending on the number of deals they close.

b. Experienced Agents: Agents with a strong client base or those specializing in luxury properties can earn anywhere from ₦5 million to ₦20 million annually.

c. Top Brokers: High-profile brokers handling multi-million-naira properties in Lagos or Abuja could earn upwards of ₦50 million per year.

Here’s a quick overview:

Agent Level	Annual Earnings	Example
Entry-Level Agents	₦500,000.00 – ₦2 million	A new agent closes a few deals in a year
Experienced Agents	₦5 million – ₦20 million	Agents with regular clients and larger deals
Top Brokers	₦50 million+	Brokers handling high-value properties in luxury areas like Ikoyi or Lekki

A Table Showing How Much Real Estate Agents Make in Lagos

Legal Challenges in 2025: Why It Matters

As the real estate industry in Lagos evolves, agents and brokers face new legal challenges.

The government is introducing stricter regulations on real estate transactions, including more precise rules on commissions and agent-client contracts.

These changes could affect how agents are paid, making working with professionals who understand the law and can protect your interests more important than ever.

Pro Tip: Always clarify payment terms upfront to make sure everything is understood.

The Bottom Line

Real estate is a lucrative industry, and agents are crucial in helping you secure your dream property or maximize your investments.

Understanding how they’re paid allows you to navigate deals more confidently and ensure you get the best value for your money.

This easy guide has cleared up any confusion about how real estate agents get paid. Understanding these details can help you make informed decisions and foster better relationships with agents, ultimately leading to smoother real estate transactions in Lagos and beyond.

However, it’s important to conduct thorough market research and work with a trusted real estate agent to navigate the complexities of the Lagos Property market and ensure a sound investment.