What is a low-commission real estate agent or broker?
Low-commission real estate is a general term for any agent, broker, or service that will help you sell your home for less than the typical commission rate in your area.
We surveyed agents across the country, and found the average real estate commission cost to be 5.45%. Selling with a real estate agent or broker that charges a low commission rate - perhaps 3% or 4% - could net you significant savings.
For example, were you sell a $346,800 home — the current U.S. median home sale price — knocking just 1% off your total commission rate could save you $3,500.
But bear in mind that not all low-commission real estate services are created equal.
Sometimes commission savings will come at the expense of key services and support, which could affect your home selling experience or outcome.
How does low-commission real estate work?
Low-commission real estate agents and brokers help sellers realize big savings by reducing their respective portion of the total commission on the sale.
To understand how this works, you’ll need a quick crash course in real estate commissions.
📚 Real estate commissions 101
In most real estate transactions, the total commission fee — 5.45% is the national average — is typically split evenly between the two agents who handle the sale:
Low-commission savings usually come from the listing agent’s fee
When your commission is lowered — for example, from 6% → 4.5% — those savings usually come from the listing agent or broker’s portion of the total fee.
In other words, the buyer’s agent commission will typically remain the same, but the listing fee drops, resulting in a lower total commission for you, the seller.
📊 Total commission breakdown: full vs. low commission
Listing agent’s fee
Buyer’s agent fee
Why does the buyer’s agent’s rate stay the same?
It’s important to offer a competitive buyer’s agent commission rate to help your home sell faster and for more money.
The buyer’s agent fee is essentially a marketing expense. It incentivizes agents to show your home to their clients.
Other sellers in your area are offering competitive rates. If you offer 1% but the similar house listed up the street is offering 2.7%, chances are an agent is going to encourage their clients to pursue that home over yours.
Low-commission agents will almost always encourage you to offer a full, competitive buyer’s agent rate because they know not doing so will make selling your home much more difficult.
How much can you save with a low-commission agent?
Your actual savings will depend on the agent or broker you work with — more specifically, the rate they’re offering — and your home’s final sale price.
But home sales are big-dollar transactions, so even a seemingly minor reduction in the total commission rate can net you significant cash savings.
For example, let’s say you were selling a $500,000 home and paying a 6% total commission — 3% to your listing agent and 3% to the buyer’s agent. You’d be on the hook for approximately $30,000 in realtor commission fees!
But if you were selling that same $500,000 home with a 1% listing agent — dropping your total rate to 4% — the total fee drops to $20,000 — $10,000 in savings!
💰 Commission savings breakdown: Traditional vs. 1% listing agent
1% commission agent
*Percentage of home’s final sale price
**Based on a $500,000 home
Some companies and agents offer flat-fee pricing — i.e., you pay a single flat rate, regardless of your home’s final sale price instead of the typical percentage-based commission structure.
Generally, these companies offer huge potential savings if you’ve got a pricier home. However, if your home sells below a certain threshold, you may end up paying more than you would with a traditional realtor.
How to get a lower commission rate
There are two primary ways to get a lower commission rate:
- Try to negotiate a lower rate with a traditional realtor yourself
- Hire a low-commission real estate company with built-in savings
How to negotiate a low commission rate yourself
According to one study, the median income for an agent in the United States as of 2020 was $42,246 - generated almost exclusively through commission.
If you’re looking to get a lower commission rate with a traditional agent, negotiating yourself is a viable option and absolutely worth trying.
But understand that, as an individual seller, your negotiating power is relatively limited. Make sure you’re going in with realistic expectations.
Here are a few things you should know before initiating the conversation.
⛔️ Some agents may be unwilling — or unable — to lower their fee
Most agents will only offer slight reductions, while others may be unwilling (or unable) to negotiate at all.
Agents have a lot of expenses to cover and typically split a hefty portion of their fee with their brokerage. If the agent drops their rate too much, they risk losing money on the deal.
Additionally, some agents — particularly newer ones — won’t actually have control over their rate. Their brokerage may dictate the pricing structure, so they couldn’t cut you a break even if they wanted to.
💪 Some situations give you more negotiating leverage
When it comes to getting lower commission fees, the specifics surrounding your sale ultimately determine your negotiating power. There are a few situations that might make it easier to get a rate reduction:
- You’re selling a high-value home
- There’s a ton of buyer demand for homes in your area
- You’ve already got a buyer lined up
- Not many people in your area are selling homes right now
🤝 Other ways to sweeten the deal
Agents may also be willing to lower their commission rate for you if it will ultimately net them more money overall. This might happen if:
- You agree to sell and buy with that same agent
- The agent is representing both you and the buyer (i.e., dual agency)
- You connect the agent with family or friends who are ready to sell or buy
⚠️ Negotiating a lower commission yourself can be risky!
Keep in mind that if you do manage to talk your agent into taking less, you could expose yourself to risks or tradeoffs.
Some agents may reduce their service scope to offset the savings — or possibly even prioritize their other full-commission clients over you.
It usually makes more sense to work with a company that negotiates low commission rates for you. This option isn’t just easier. It also typically offers better savings and less risk.
Should you hire a low-commission real estate company?
Low-commission real estate companies are brokerages and services offering built-in listing fee savings for home sellers.
Every company is unique and savings can vary considerably by brand. For example, some offer low commission percentages; some offer set flat rates; and others offer a combination of the two, depending on the home’s sale price.
The three main types of companies that offer low commission rates are:
- Agent-matching services
- Discount real estate brokers
- Limited-service real estate brokers
One of these options is far less risky than the other two, as we’ll explain below.
Agent-matching services offer built-in savings and fewer drawbacks
🔑 Best for sellers who…
Agent-matching services — also known as referral services — do exactly what the name suggests:
They plug you into their network of pre-vetted realtors, aiming to match you with the best possible fit based on your specific goals and preferences. Some agent-matching services, like Clever, also pre-negotiate low commission rates on your behalf.
But why would a top agent from a major brokerage like Keller Williams or Coldwell Banker be willing to offer the same, full service for less than their typical rate? Because agent-matching service sends them a steady stream of new prospective customers at zero upfront cost.
This helps the agent grow their business and save on the typical time and cost they put into finding new clients. They then pass those savings on to you, the seller, as a low commission fee.
The agents also understand that if they don’t provide stellar service, their agent-matching partner will stop sending them referrals. In other words, this option creates less service risks than other low-commission options like discount brokers and limited-service agents.
Most discount real estate brokers trade customer service for savings
🔑 Best for sellers who…
Discount real estate brokers like Redfin, Homie, and Redefy offer big potential commission savings. But the catch is typically less dedicated service and support throughout your sale, which can lead to a negative experience or subpar outcome.
Every discount broker has its own special formula to create savings, but most look to offset their reduced rates by handling a higher number of customers with a smaller team, relative to a more conventional brokerage.
Many try to compensate by relying heavily on technology to manage communications and back-office teams to handle different aspects of the sale. Unfortunately, this sometimes causes more problems than it solves.
Overextended agents have less time to spend focusing on your sale, which could make it more difficult or stressful to sell your home.
The fact is, home sales are complex, high-stakes transactions. Without the dedicated attention and support of an experienced professional, chances are you’re going to come away with a less-than-optimal outcome.
Limited-service agents are cheap — but you get what you pay for
🔑 Best for sellers who…
Some agents charge low commissions or flat fees for a limited set of services. Others may offer a la carte pricing options, where you can pick and pay for only the services you want.
Many of these companies are very cheap, charging flat rates ranging from a few hundred to a few thousand dollars. But keep in mind that you’re not necessarily getting much in return for that fee — and you’re typically on the hook for it whether your home sells or not!
Unless you’re highly experienced with both real estate and negotiating, working with a limited-service agent will likely result in you coming away with less than you’d net on an agent-assisted sale. And that hit on price may actually outweigh the potential commission savings!
Top 5 low-commission real estate companies in 2021
1% or $3,000
4.9 (590 reviews)
1.5% (minimum fees vary by market)
3.2 (287 reviews)
$3,500 ($500 due up front)
4.6 (345 reviews)
2% or $3,000
4.8 (866 reviews)
2.5% ($9,000 minimum fee)
4.7 (765 reviews)
More ways to save on realtor commission fees
For sale by owner (FSBO)
When you sell your house FSBO it means you’re handling the entire process yourself, with no help from an agent whatsoever.
The potential savings are significant. You’re not just getting a low commission rate — ideally, you’re avoiding commission entirely (or at least your listing agent’s fee).
Unfortunately, FSBO sales are often easier said than done. Most experts agree that the many drawbacks typically outweigh the potential benefits.
You’ll pay no listing commission at all, which could save you up to 3%
You’ll likely still have to offer a 2.5-3% buyer’s agent fee
Total freedom on pricing, staging, showings, and closing
Selling a home is a huge commitment in terms of time and effort
Zero external pressure — wait as long as you’d like for the right offer
Most FSBO homes sell for less — and many fail to sell at all
When does it make sense?
- You have a ton of real estate and negotiating experience
- You’re on a highly flexible selling timeline
- You’re confident the commission savings will outweigh the potential price hit
Flat-fee MLS service
A flat-fee MLS service is a bare-bones listing service that will get your home on the local MLS and other popular real estate sites for a small flat fee. Pricing is usually in the range of $99-299.
While some companies offer upgraded packages, like help with marketing or closing, most flat-fee MLS services only get your home on the MLS. You'll manage every other aspect of the sale entirely
Low cost — you’ll likely pay hundreds instead of thousands
You’ll still have to handle most of the sale process yourself
You get far more visibility with an MLS listing
You’re on the hook for that fee whether your home sells or not
More flexibility to choose and pay for only the services you need
Agents may avoid your home if they see you’re not listing with a legit agent
When does it make sense?
- You can handle the bulk of the sale but just want a visibility boost
- You have a highly desirable home that will likely sell itself
- You’re comfortable paying an upfront fee with no guarantee of results
» MORE: What is a flat-fee MLS service?
iBuyers, like Opendoor and Zillow Offers, are a new breed of high-tech companies that use advanced data analytics to make all-cash offers on homes.
Most iBuyers will submit an initial offer on qualifying homes, typically sight-unseen, within one to two business days. If the seller accepts, the company will typically conduct an in-person inspection, adjust the offer price accordingly, then offer a flexible closing time ranging from 10-90 days.
In exchange for that convenience, sellers pay a hefty service fee — usually between 5-15% — and have little wiggle room to negotiate on price. Because iBuyers only buy very specific types of homes in a handful of markets, they aren’t a viable option for most sellers. But they are growing fast, so that may change soon.
Fast, all-cash offers
High service fees
Flexible closing timelines
Could sell higher on the open market
The convenience of avoiding listing on the open market
Few homes qualify for iBuyer purchase
When does it make sense?
- You have a relatively new home in good condition
- Your home is located in an iBuyer market
- You prioritize convenience, flexibility, and control over getting the best possible price
» MORE: Learn more about iBuyers
We Buy Houses for Cash companies
You’ve probably seen “We Buy Houses for Cash” signs around your neighborhood or gotten flyers in the mail. These are companies and investors who are typically willing to purchase any home, regardless of its condition or location, for cash.
Keep in mind that most of these investors are looking to fix the home up and resell it quickly for a profit, so they need to pay as little as possible to ensure a decent margin on the resale. Don’t be surprised if the offer is up to 40-50% below its fair market value.
Will buy any home, regardless of its condition or location
Will likely take a big hit on price
Agents typically aren’t involved, which means you avoid commission fees
Many of these companies are legit, but there are scammers out there
Typically pay cash, which makes the process faster
If you decline the offer, some buyers will continue to text/call you for months or years
When does it make sense?
- Selling fast is more important than getting the best price
- You’re unable or unwilling to fix your house up before listing
- You simply don’t want to deal with the hassle of selling on the open market