If you are preparing to sell your home or comparing real estate agents, knowing the average cost of realtor commission is essential — it can help you accurately estimate costs or determine if you're getting a good deal from agents you're considering working with.
We surveyed agents across the country, and found the average real estate commission cost to be 5.45%. However, as these rates are highly localized, it is important to know what these figures are in your area.
>> FIND: Commission rates in your state.
In addition to knowing what agents normally charge, it's also important to understand commission fees are not standardized or set in stone. Home sellers always have the power to negotiate commission rates — doing so could save them thousands of dollars when selling their home.
If instead of selling you're planning on buying a home, you should know that realtor fees are typically covered by the home seller.
>> LEARN: More about who pays realtor commissions.
JUMP TO SECTION
Typical Real Estate Commission Costs
To deliver home sellers the most accurate information on realtor commission rates, we conducted a comprehensive survey of active agents across the country. We found that typical realtor commission rates were in the range of 5.06% to 5.86%.
Remember: these rates only represent averages. Commission rates aren't standardized in any official capacity and you can always negotiate realtor fees with your agent.
Get low rates without negotiating!
Clever can connect with top listing agents for pre-negotiated rates of just $3,000 or 1% for homes sold for more than $350k.
Average realtor commission for listing agents
According to our research typical commission rates for listing agents nationwide are in the range of 2.58% to 2.99% (2.79% on average). For a home sold for $250,000 (which is around the national median home value), this translates to $6,457-$7,471.
We also found that listing commission costs can vary by as much 26% depending on where you live. Here's how listing commissions differ in states with the highest and lowest typical costs.
So, for example, if the total commission rate is 5% of the home's sale price — then 2.5% would go towards listing agent commission.
Average buyer's agent commission rates
Nationwide, buyer's agents typically collect 2.47%-2.87%, or 2.67% on average. This translates to $6,181-$7,179 in buyer's agent commission costs for a home sold for $250,000.
These figures represent the national average, though we found that buyer's agent commission rates varied by 0.55 percentage points depending on which state you live in — which is a significant cost difference. Below, we've included a breakdown of how buyer's agent commissions compare across the country:
Our research found that commission rates can vary dramatically depending on your location. For example, we found that average commission rates in the District of Columbia were nearly one full percentage point lower than those in Wisconsin, with rates of 4.91% and 5.85% respectively. These areas had the lowest and highest average realtor fees according to our survey.
Find your state below to learn more about commission rates near you.
|Rank||State/District||Avg real estate commission rate|
|1||District of Columbia||4.91%|
|9 (tie)||New Hampshire*||5.27%|
|9 (tie)||Rhode Island*||5.27%|
|27 (tie)||New Mexico*||5.57%|
|27 (tie)||West Virginia*||5.57%|
|37 (tie)||North Dakota*||5.63%|
|37 (tie)||South Dakota*||5.63%|
* Due to insufficient data, commission rates in these states were inferred from regional averages.
When you sell a home, there are typically two realtors involved: the buyer's agent and the listing agent. As the name implies, the buyer's agent represents the home buyer, and the listing agent represents the home seller. These agents get paid a portion of the home's price at closing, which is called the real estate agent commission — they are also referred to as realtor fees.
>> LEARN: More about how realtor fees work.
Realtor fees are not typically paid upfront — instead they are factored into the sales price of the home, and are only paid out when the home's sale is finalized. Here's how a realtor commission rate of 5.45% — which we found to be the national average — breaks down in terms of real dollars when you sell your house:
|Home sale price||Real estate commission cost*|
* Commission costs are calculated assuming a commission rate of 5.45%.
Real estate commission rates are commonly talked about as a single percentage (eg 5%). However this figure is actually split to cover the cost of both the buyer's agent commission and the listing agent commission. For example, if the total commission cost is 5%, then each agent would typically get around 2.5%:
- Listing agent commission: 2.5%
- Buyer's agent commission: 2.5%
- Total realtor commission: 5% (2.5% + 2.5%)
Commissions are often split relatively evenly between the buyer's agent and the listing agent, however this can vary based on what is customary in your area. We found that depending on what region you live in, commission splits could range from 49%-51% to 53%-47% for the listing and buyer's agent respectively.
Who pays realtor fees?
Home sellers pay real estate fees for both their own agent, and the agent representing the home buyer.
Why would home sellers pay for the buyer's agent? Well, there are a couple of ways to look at it:
- Buyer's agent commission is a marketing cost for your home: Almost all buyers — nearly 90% — work with an agent to help them buy a home. These agents are more interested in showing homes to their clients that offer a competitive buyer's agent commission. In this way, offering a buyer's agent commission helps generate interest in your home.
- The buyer actually is paying for this cost, because it's baked into the sale price: Since the buyer's agent commission is factored into the sale price of the home, you can argue that cost is actually passed onto the home buyer. If this commission wasn't offered, the home seller could lower the price of the home while netting the same amount from the transaction.
Why are real estate agent commissions so expensive?
Realtor fees are a huge cost when you sell your home, so it makes sense to wonder why it is so expensive and if it makes sense to pay so much. While these are totally valid concerns, there are some justifiable reasons that agents charge what they do for their services:
- On average, agents help you sell your home for more money than if you were to sell without the use of an agent
- Agents don't get to keep all of the commission they earn from a home sale — they split it with the buyer's agent and their brokerage
- Realtors take on risk by covering home-marking costs upfront
>> LEARN: About ways to save on commission.
Real estate agents help you get more for your home
In addition to helping you navigate your real estate transaction, one of the most important things that agents do is ensure that you get the highest possible price for your home.
Studies have shown that homes sold by real estate agents net 5.82% more than comparable homes sold without an agent. With that in mind, it's fair to say that most home sellers come out ahead by working with an agent, even after paying realtor fees.
Most real estate agents have to split their commission with their broker
Most agents don't get to keep all of their commission when a home sale closes. A portion of their commission is paid to their principal broker— which are real estate professionals that supervise real estate transactions done by agents that aren't qualified to process deals independently.
Principal brokers can get anywhere from 50% to 25% of an agent's commission on a home sale — meaning the amount your listing agent earns might be significantly less than you think.
For example, if a listing agent sells a home for $200,000 where the total commission rate is 5%, they may actually walk away with $3,000 after factoring in the commission split with both the buyer's agent, and their broker. This might still feel like a significant sum, but it is substantially less than the total commission cost of $10,000.
Listing agents pay for home marketing costs upfront
Real estate agents take on a significant amount of risk when they agree to help you list your home, which factors into the high cost of realtor fees.
This risk comes from the fact that agents commit their time without any guarantee they will be compensated. Furthermore, agents often pay for marketing expenses such as photography, advertising, and staging up front and out of pocket. If they fail to sell your home, they don't collect any commission, aren't compensated for their time, and don't recoup any of the marketing costs they incurred.
Factors that Influence Commission Rates
In addition to regional trends, there are a number of factors that influence how much you end up paying in realtor fees when you sell your home.
Most of these factors stem from the fact that realtor fees are negotiable, and agents can lower or raise the amount they charge depending on your situation. In general, if your home is going to be easy to sell or will generate a lot of income for the listing agent they will be more inclined to accept lower commission rates.
Based on our research, working with repeat clients is the most common reason that real estate agents agree to accept lower rates. Here's a full breakdown of the most common factors that cause agents to lower their commission rates:
Conversely, our survey showed that the most common reason that listing agents negotiate for higher rates was that home sellers requested expensive marketing. Below, we've included the full breakdown of all of the factors:
How home value affects typical real estate commission rates
Typically, realtors will be more willing to accept lower commission rates for homes that have high values.
Our study of commission rates found that in real estate markets where home values were high, realtor fees were typically lower than the national average. For example, commission rates averaged 5.26% across the states with the highest median home values — which is markedly less than the national average of 5.45%.
Based on our survey's findings, homeowners in the five states with the highest property values would pay 7% less in realtor fees when they sell their home than residents in the states with the five lowest home values — as a percentage relative to their home's sale price.
So why would high home values cause agents to lower their rates? Mainly, it's because the work that agents have to do to sell homes is not significantly different for high and low value homes. And because agent's earn commission based on the home's selling price, they stand to earn a lot more money selling higher value homes relative to their effort and time investment than lower value homes.
Furthermore, even if they have to spend more time or money marketing a high cost home, it may be worth it for that agent. Consider the following example, where the listing agent earns 57% more per hour selling a $500,000 home than they would selling a $250,000 home, even after factoring in the marketing costs and time commitment:
|Home sale price||$250,000||$500,000|
|Time to sell||10 weeks||12 weeks|
|Out of pocket marketing cost||$500||$1,000|
|Time spent actively selling (eg showing, marketing, etc.) the home||30 hours||34 hours|
|Net commission earned per hour of time actively marketing/showing the home||$150||$235|
Why realtors lower rates for repeat clients
Having steady business is valuable for real estate agents — home sellers can use this fact to negotiate lower commission rates.
For real estate agents, having consistent streams of clients is crucial to their livelihood. Afterall, real estate agents typically only process around 12 real estate transactions per year— meaning that gaining a deal has a large impact on their income.
To agents, there is more value in having reliable repeat business, than there is in maximizing their commission they earn on any single deal. Because of this, agents often lower rates to attract clients that are likely to use them for future transactions.
Data on commission rates is based on a survey of 521 of our partner agents, in which we asked them to indicate the typical rates for both buyer's and seller's agents in their area.
The data featured on this page is not meant to imply that commission rates are fixed — commissions rates are always negotiable. These figures represent ballpark estimates of what home sellers can expect to pay in real estate agent fees when they sell their home.
In addition to data from our survey, we also utilized home value data from Zillow, which was current as of May 22, 2020.