What is a 2% Real Estate Commission?

Trevor Wallis

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Trevor Wallis

May 12th, 2021
Updated May 12th, 2021

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How it works | Potential savings | Get a 2% listing fee | Find low commission agents | Negotiating tips | Limited-service agents | 2% companies | Less than 2% options | More ways to save

What is a 2% commission realtor?

A 2% commission realtor is a real estate agent who will list and sell your home for 2% of its final sale price.

This discounted listing fee could save you thousands of dollars compared to the 2.5-3% commission most listing agents charge. For example, on a $750,000 home sale, you could save $7,500 in listing fees!

In most cases, your listing agent's fee isn't the only commission you'll pay, though. You'll want to offer a competitive buyer's agent commission as well — typically another 2.5-3%.

So, when you use a 2% commission realtor to sell your house, you'll actually pay 4.5-5% in total commission — saving you 20-30% in realtor fees compared to the typical 5-6%!

Want to save even more commission? Clever pre-negotiates 1% listing fees with local agents (or $3,000 for homes under $350,000). You'll get the support of a full-service agent at a third of the traditional price.

» SAVE: Sell with a top local agent for just 1% or $3,000.

How much can you save with a 2% listing fee?

Paying a 2% real estate commission could save you thousands of dollars, depending on your home's price.

A 2% listing fee means you'll pay 4.5-5% in total commission if you offer a competitive buyer's agent commission.

While this may not seem like a massive discount over the typical 5-6% you'd pay with a traditional realtor, it could still mean big savings — especially for more expensive properties.

Here's how much you could save by working with a 2% commission realtor at three different sale prices.

Home price
2% listing fee
Potential savings*
$250,000
$5,000
$1,250
$500,000
$10,000
$2,500
$750,000
$15,000
$6,750
*Compared to 3% listing fee

Why do agents work for 2% commission?

Listing agents and brokerages offer 2% commission to attract more home sellers in a highly competitive market.

There are 44% more realtors today than there were a decade ago.[1] Plus, discount brokerages offering built-in discounts are becoming more popular every year.

All this new competition is shaking up long-standing pricing norms. Agents are becoming more creative with pricing and service structures to stand out from their competitors and win your business.

How can agents work for 2% listing fees and still make money?

Agents who offer a 2% real estate commission can still make a profit by cutting services and working with more clients overall.

Many agents choose to ditch the traditional full-service model in favor of a la carte pricing. This pick-and-choose approach attracts sellers who are only interested in a handful of specific services, saving the agent time and money (since the seller takes on a lot of the responsibilities).

» MORE: How much do real estate agents make?

Find the best 2% realtors

Only a few companies have figured out how to offer discounted commissions without sacrificing customer service.

A 2% commission, or lower, can come with trade-offs that you need to be aware of and comfortable with. You should research each company carefully to understand what they offer (and what they don't) for a reduced fee.

We recommend interviewing at least three agents or companies before making a decision. Weighing multiple options lets you move ahead with confidence, knowing you picked the agent that best fits your needs.

💰 Double your savings with Clever's 1% rates

Try our free, no-obligation agent matching service! Interview as many agents as you like until you find the perfect fit — and enjoy discounted rates of just $3k or 1.

How to get a 2% listing commission

There are three ways to get a 2% commission:

  1. Try to negotiate with a traditional realtor yourself
  2. Hire a limited-service agent
  3. Work with a discount real estate company

Negotiate a lower commission with an agent yourself

Negotiating a reduced listing fee with a traditional realtor is certainly possible, but talking them down from 3% to 2% could be difficult.

Agents split the listing commission with their broker and cover a lot of expenses out of their own pocket.

A rate drop from 3% to 2% represents a 33% drop in the agent's income from the sale, which could actually lead to them losing money on the sale. That's a risk many agents aren't willing to take.

As an individual seller, you have limited negotiating power. But there are a few checkmarks that could help you negotiate a lower fee:

  • You're selling a high-value home
  • Your area has high buyer demand
  • There are a lot of agents in your area competing for new seller clients
  • The agent can represent both you and the buyer, also known as "dual agency"
  • You agree to sell and buy with the same agent or brokerage

» MORE: How to negotiate a realtor commission

Hire a limited-service agent

Some agents offer fewer services than a traditional realtor for a reduced commission.

Most limited-service agents offer either limited listing packages or a la carte pricing options. A limited package may include more technical parts of the process, like getting your home listed on the local multiple listing service (MLS) or help with contracts and negotiations — but everything else will be in your hands.

A la carte pricing, on the other hand, lets you pick and choose the services you want the agent to handle while you take care of everything else.

Limited-service agents could be a good option for experienced sellers who are confident they can handle most of the process themselves.

You can save a lot of money — often paying much less than 2% — but you'll invest more time and assume a lot of the legal risk that comes with selling your home.

» MORE: Limited-service agent vs. traditional realtor

Hire a low-commission real estate company

There are two types of real estate companies that offer 2% listing fees (or lower).

Discount real estate brokerages

Discount brokerages offer built-in reduced realtor commissions when you work with their in-house agents.

Many of these brokerages offer lower percentage rates (like 2% listing fees), while others charge a flat rate, no matter how much your home sells for.

You could save a lot of money with a discount brokerage, but there are risks.

Many of the agents at these companies handle a lot more transactions than a traditional realtor. This could limit their ability to give you dedicated support throughout the process.

» MORE: The Ultimate Guide to Discount Real Estate Brokers

Agent-matching services

Agent-matching services can connect you with local real estate agents who can help you sell or buy a home. These services are usually free to customers — agents pay them a small fee for sending customers to them.

The best agent-matching services won't just match you with an agent for free, they'll negotiate a listing fee discount on your behalf. Because they send agents a steady stream of new business at zero upfront costs, the agents can lower their rates and still make money on the transaction.

Try Clever’s free agent-matching service

List with a top-rated local real estate agent for just 1% or $3,000.

Companies that offer 2% listing fees

Company
Average savings*
Average rating
REX Real Estate
-$325
4.7
Ideal Agent
$3,750
4.8
*Based on four different sale prices compared to a 3% listing commission

» MORE: Which company has the lowest commission rate?

REX Real Estate

REX is a discount brokerage with in-house agents that advertises a 2.5% total commission for sellers. While this sounds like a great deal, it's actually quite risky. REX doesn't list your home on the MLS and cuts out the buyer's agent commission rather than reducing its own fee.

Without the MLS, your home gets less exposure to potential buyers and their agents. And, since you don't offer a buyer's agent commission, people who are unwilling or unable to pay their agent's fee out of pocket will likely turn to other properties instead.

» MORE: How REX Real Estate works (and its risks)

Ideal Agent

Ideal Agent is a free agent-matching service that pre-negotiates 2% listing fees with local full-service real estate agents. These agents work for well-known brokerages like Berkshire Hathaway, Coldwell Banker, and RE/MAX.

Ideal Agent matches you with one highly rated agent in your area. There's no obligation to work the matched agent if you decide they’re not a good fit, but you may have limited options.

Companies that charge less than 2% commission

Company
Average savings*
Average rating
Clever
$7,375
4.9
Redfin
$5,550
3.2
*Based on four different sale prices compared to a 3% listing commission

Clever Real Estate

Clever is a free agent-matching service that pre-negotiates 1% listing fees (or $3,000 for homes under $350,000) with top local agents nationwide.

Clever's Partner Agents have excellent track records. They work for well-known national and regional brokerages like Keller Williams, Coldwell Banker, Century 21, and more.

When you sign up, you'll be matched with several agents. You can interview each of them, compare their marketing plans, and choose the best fit for your specific needs and preferences.

» LEARN: How Clever helps you save thousands without sacrificing service

Redfin

Redfin is a national real estate brokerage that offers discounted 1.5% rates for home sellers. If you decide to sell and buy with Redfin, your rate will drop to 1% (via a 0.5% commission refund).

Redfin’s savings are legit, offering full service from a well-established brand for about 20-30% less than most traditional realtors. However, Redfin Agents handle roughly 3x more customers than the typical agent, which may limit their ability to provide dedicated, hands-on service and support throughout your sale.[2]

» MORE: Should you sell your home with Redfin?

Alternatives to 2% commission realtors

Traditional realtors and 2% commission real estate agents may not be your only options for selling your home. Other choices can offer more control, convenience, or speed — but they each have their own tradeoffs as well.

For sale by owner (FSBO)

If you want to avoid paying a listing agent completely, you can sell your home for sale by owner. While the potential savings are massive, FSBO will lead to a bigger time investment, more stress, and greater risk.

You have to take care of the entire process yourself — from pricing and advertising to contracts and negotiations. If you work full time or are moving out of the area, selling your home could become a big challenge.

Even after you put in all the extra effort, you risk listing your home at the wrong price or negotiating poorly, which could eat into the money you saved by selling without a listing agent.

» MORE: How to sell your house for sale by owner

Flat-fee MLS companies

Flat-fee MLS companies list your home on the local MLS — an agent-only listings database — for a set fee. Agents use the MLS to find properties to show potential buyers.

Since only licensed real estate agents can list a property on the MLS, using a flat-fee MLS company is a simple way for FSBO sellers to get their homes on the database.

You won't get much more from these companies, however. Some offer add-on services like contract reviews, yard signs, and pricing assistance for an extra fee, but the costs can add up quickly. If you aren't careful, you could pay nearly the same as a discount agent's fee without getting nearly the same level of service.

» MORE: What you need to know about flat-fee MLS listings

iBuyers

iBuyers, like Opendoor and Zillow Offers, use advanced technology to make all-cash offers on homes, often sight-unseen.

These companies allow you to sell your home without having to list it on the open market. If your home qualifies, you can often get an offer within 24-48 hours.

But this convenience and flexibility isn't cheap — iBuyers typically charge 5-15% of your home's sale price in service fees. They also restrict your ability to negotiate on price and terms outside of a few options (like flexible closing dates).

These companies are only available in a few cities, but the iBuyer market is growing quickly. Still, your property may not qualify even if you do live in a market with an active iBuyer. These companies have very strict requirements for the properties they'll purchase, making it difficult for many sellers to get an offer.

» MORE: What is an iBuyer?

"We buy houses for cash" companies

If you’re looking to sell fast with minimal hassle, most markets are full of investors and companies that will buy any property — no matter its location or condition — for cash.

Unlike iBuyers, these “We buy houses” companies have very few limits on the properties they'll buy. In other words, this could be a great option if you’ve got a “distressed” or difficult-to-sell home, need to move quickly, or simply don't have the resources or desire to get it ready for the open market.

The tradeoff is going to be the price tag. These investors are looking to fix up and resell your home for a significant profit, so they typically can only pay 50-60% of a home’s fair market value to ensure they don’t take a loss on the deal. But depending on your situation, a fast, all-cash offer could be well worth the price hit.

» MORE: What you need to know about "we buy houses for cash" companies

ARTICLE SOURCES
[1]

National Association of REALTORS®. "Historic Membership Report." 

[2]

Redfin. "2020 Investor Presentation." Page(s) 13.

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