3% Commission Realtors: Can You Pay Less? (2024 Update)

Steve Nicastro's Photo
By Steve Nicastro Updated February 7, 2024

SHARE

A 3% commission realtor refers to an agent, whether representing a buyer or a seller, who charges 3% of the final sale price of a home. This rate is in line with the industry average, though it's a tad higher than the typical 2.83% for a seller's agent and 2.66% for a buyer's agent.

However, a 3% commission real estate agent does not encompass the total commission in a home sale. On average, real estate commission rates nationwide for the seller stands around 5.49%, as the seller usually pays both the listing agent and buyer's agent fee.[1]

Exploring the traditional 3% commission model also reveals opportunities for reduction, potentially cutting the rate in half – and leading to huge savings in your home sale or purchase. It's even possible to get a 3% total commission rate by working with a top discount brand that offers full service for a lower price.

For example, Clever Real Estate pre-negotiates 1.5% listing fees with top local agents from traditional brokerages like Keller Williams and RE/MAX. You'll benefit from top-notch agent expertise at just a 1.5% listing fee, undercutting the national average of 2.83%.

» SAVE: Find top local agents and get a 1.5% listing fee!

How 3% realtor commission works

In a standard real estate sale across the country, sellers typically pay 5.49% of their home’s final sale price in realtor commissions, according to Clever's survey of 630 partner real estate agents across the United States. Another Clever study found that most sellers (71%) who used an agent spent 5% or more on commission. [1]

This percentage might seem steep at first glance, but it's important to remember that it includes the fees for both the listing agent and the buyer's agent – a common practice in the real estate industry.

Here’s how it breaks down: 

  • The listing or seller’s agent, who assists the homeowner in pricing, marketing, and selling their property, generally receives between 2.5% to 3% of the sale price, averaging around 2.83%.
  • On the other side, the buyer's agent, responsible for bringing a qualified buyer to the table, also gets a similar commission, typically ranging from 2.5% to 3%, with the national average sitting at 2.66%.
  • On a $400,000 sale and at a 3% rate, both the buyer's agent and seller's agent would earn $12,000 in realtor commissions. Real estate agents typically get paid at closing. 

Prior to signing a listing agreement with an agent, the seller decides the commission percentage they're willing to offer the buyer's agent. 

Also remember that while the standard rate for each real estate agent is usually between 2.5-3%, these fees are not fixed. You can negotiate realtor fees, which also often vary depending on factors like location, the brokerage firm involved, and the extent of services provided. 

So, when dealing with realtor fees, keep in mind that there's room for negotiation and variations based on several factors.

Why do real estate agents charge 3%?

Two key factors drove the traditional 3% commission model: 

1. Relieve up-front costs for home sellers. Real estate transactions include various costs to sell, such as home staging, professional photography, and advertising. These expenses can add up quickly, creating a financial burden before the home even hits the market. 

The 3% commission model helps sellers by deferring marketing and selling expenses until the home is sold. Agents cover these costs initially and are reimbursed through the commission at the sale's closing.

2. Provide agents with a reward for the risk they take on. Agents take on a considerable amount of risk, investing their time and resources into marketing and selling a property without a guaranteed paycheck. This risk includes not just the time spent but also the costs incurred for marketing and advertising the property. 

This model lets sellers pay their agent after the house sells. And the 3% commission is enough to incentivize realtors to invest in marketing the seller's home, despite not having a guarantee of getting paid.

Say goodbye to the 3% commission

While average commission rates have varied over time, advancements in technology and innovation have streamlined the home selling process. Consequently, the traditional 3% listing fee is becoming less practical for many sellers.

Clever Real Estate addresses this by offering a more cost-effective solution. We've pre-negotiated 1.5% listing fees with agents from renowned brokerages such as Keller Williams and RE/MAX. Opting for an agent through Clever means you receive the same level of expertise, service, and support from a top realtor, but at only half the usual commission rate.

Get matched with a local agent today!

Why do sellers pay the buyer's agent fee?

Home sellers usually pay the buyer's agent fee for a couple of reasons:

  1. It decreases the out-of-pocket costs for the buyer. If buyers had to pay for their agent, many more people wouldn't be able to afford a home. Sellers covering the cost allows for a larger pool of potential buyers.
  2. It incentivizes buyer's agents to show your property. Buyer's agents are more likely to point their clients to your listing if you offer a competitive buyer's agent commission. The agents know they'll get paid well if one of their clients purchases your property.

📊 Survey Snapshot 

A Clever study of 1,000 participants found that 51% of Americans underestimate realtor commission costs, with only 11% accurately understanding that agents typically earn around 6% of the final sale price. 

Just over half of all sellers feel they shouldn't bear the cost of the buyer’s agent. Meanwhile, 62% of Americans incorrectly believe buyers cover their own agent’s fees, which may contribute to 65% wrongly assuming buyers save money by foregoing an agent.

Do I really need to pay a buyer's agent fee?

You have no legal obligation to pay a buyer's agent 3% commission. But most listing agents recommend that you offer close to the local average (usually 2.5–3%). If you want buyer's agents to show your house to their clients, you need to make it worth their while.

By offering a competitive buyer's agent commission, you'll likely have a larger pool of potential buyers. This can help you get multiple offers, sell for the price you want, and sell quickly.

🔄 Buyer's agent fees: A potential shift coming 

Currently, sellers typically pay both their and the buyer's agent commissions. However, a $2 billion lawsuit against the National Association of Realtors, Homeservices of America, and Keller Williams Realty is challenging this norm. 

The suit, which found these entities guilty of misleading sellers into paying high commissions, argues that the burden of the buyer's agent fee unfairly falls on sellers. This could lead to a future where buyers pay their own agent's fees.

No immediate changes are forthcoming, but we're closely monitoring the situation and will keep you updated.

» Backgrounder Q&A: National Association of REALTORS

How to avoid paying 3% commission

Most home sellers have the opportunity to bypass the traditional 3% listing commission by partnering with a low-commission real estate broker. The leading firms in this space offer listing fees as low as 1.5%, while still delivering the full range of services you'd expect from conventional realtors.

To cut down on the usual 3% real estate commission without sacrificing quality and service, it's worth exploring the top low-commission companies. Choosing the right one is key to aligning with your specific goals and ensuring the best value in your real estate transaction.

Top low commission companies

Company Clever Rating Listing Fee Availability
Best overall
4.8
Our rating
1.5%
Nationwide
Find Agents
On listwithclever.com
4.5
Our rating
1.5%
26 states (select markets)
Learn More
4.5
Our rating
2%
Nationwide
Learn More
4
Our rating
1%
FL, MD, PA, NJ , VA
Learn More
4
Our rating
1.5%
CA, CO, CT, FL, MD, MA, NJ, NY, PA, TX, VA, WA
Learn More
Best overall

Clever Real Estate

Find Agents
On listwithclever.com
4.8
Our rating

Listing Fee

1.5%

Editor's Take

Overview

Locations

Clever Real Estate is the best option for most sellers looking for an agent. The company matches you with multiple full-service agents from local brokerages, including top brands like Keller Williams and RE/MAX. It offers a low 1.5% listing fee no matter which agent you choose.

Pros

  • Get matched with top-producing local agents in minutes.
  • Guaranteed 1.5% listing fee (half the usual rate).
  • Free agent matching service with no obligation to commit to any realtor.
  • Large agent network offers great selection compared to similar services.

Cons

  • No guarantee you’ll get matched with a specific agent or brokerage.
  • Add-ons like professional home staging and drone photography may cost extra.

Clever Real Estate offers a lower commission without sacrificing quality. Through its free service, you can find top-rated agents in your area and sell for just a 1.5% listing fee (much lower than the average realtor commission rate).

How it works: You take a short online quiz (five questions) to help Clever understand your situation and preferences. Then Clever matches you with vetted agents in your market who are a good fit. If you don’t like the agents Clever recommends, you can request more matches until you find the right fit — or simply walk away.

Why it’s great: You can use Clever to compare top-producing local realtors from major brands like Compass, Century 21, and Coldwell Banker. Each realtor in Clever’s network has agreed to offer lower commission rates, which lets you focus on choosing the best agent instead of worrying about the price. You get the same savings no matter what.

Clever is available nationwide.

Great savings, but some risks

Redfin

Learn More
On listwithclever.com
4.5
Our rating

Listing Fee

1.5%

Overview

Locations

Redfin is a discount real estate brokerage that offers a listing fee of 1.5% — about half of what realtors traditionally charge. If you buy and sell with Redfin, you can get a 0.5% rebate, bringing your listing fee down to 1%.

The company can offer these savings because of its team-based service model. Various members of the Redfin team handle different stages of the transaction, which allows agents to take on a high volume of clients. With this model, Redfin agents tend to provide less one-on-one service than traditional realtors.

Redfin is one of the largest brokers in the country, operating in 100 major cities across the US and Canada. But it has almost no coverage outside of large cities.

Read the full Redfin review.

Redfin is available in Washington D.C. and most major cities in the following states: Arizona, Arkansas, California, Colorado, Florida, Hawaii, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia.

Good agents, but limited choice

Ideal Agent

Learn More
On listwithclever.com
4.5
Our rating

Listing Fee

2%

Overview

Locations

Ideal Agent is a real estate company that matches buyers and sellers with real estate agents.

Compared to similar companies, Ideal Agent has some of the strictest performance criteria for the agents it lets into its network. This vetting process means you're more likely to be matched with a top agent, although it also means there are fewer agents overall to choose from.

The company also offers a discounted listing fee of 2% (min. $3,000) compared to the 2.5–3% that realtors traditionally charge.

While Ideal Agent’s primary service is agent matching, the company also has a cash buyer program. With this program, Ideal Agent solicits multiple cash offers for your home from various investors. While you’re unlikely to make as much as you would selling on the open market, a cash buyer provides the convenience of a fast closing.

Ideal Agent is available nationwide.

Great savings, but less support

Houwzer

Learn More
On listwithclever.com
4
Our rating

Listing Fee

1%

Editor's take

Overview

Locations

Houwzer is a great option for savings, but only if you’re comfortable receiving less hands-on support than you’d get from a traditional real estate agent.

The company's 1% listing fee could save you thousands compared to the 3% that traditional realtors charge.

But Houwzer — like the better-known Redfin — uses a team-based approach. You get paired with a real estate agent, but other Houwzer team members handle a lot of your transaction. That means less hands-on support from your agent and more opportunities for miscommunication.

Pros

  • The 1% listing fee provides significant savings.
  • The service includes 25 HD photos and virtual tours.
  • Buyers can save by bundling mortgage and title.

Cons

  • You get less one-on-one support from your realtor.
  • The team-based service creates opportunities for miscommunication.

What it is: Houwzer is a regional discount brokerage that charges a 1% listing fee compared to the traditional 3%.

How it works: When you work with a Houwzer agent, you'll receive pricing guidance, an MLS listing, photography, a 3D house tour, and guidance during closing, due diligence, and negotiations. Buyers can also use a Houwzer agent to find a home.

Customer reviews: 4.8/5 (481 reviews)

  • Aggregate Google Rating (6 locations): 4.9/5 (566 reviews)
  • Yelp: 4/5 (42 reviews)
  • Zillow: 5/5 (9 reviews)

Locations: Houwzer is available in Florida, Maryland, New Jersey, Pennsylvania, and Virginia. Since purchasing Trelora, it is available under the Trelora brand name in Arizona, California, Colorado, Georgia, Illinois, North Carolina, South Carolina, and Washington.

Houwzer is available in Florida, Maryland, New Jersey, Pennsylvania, and Virginia. Since purchasing Trelora, it is available under the Trelora brand name in Arizona, California, Colorado, Georgia, Illinois, North Carolina, South Carolina, and Washington.

Best for buyers in high-end markets

Prevu

Learn More
On listwithclever.com
4
Our rating

Listing Fee

1.5%

Overview

Locations

Prevu is a discount brokerage that connects buyers and sellers with agents. The company advertises a buyer rebate of up to 2% and a 1.5% listing fee for sellers. However, minimum fees and other requirements mean many customers won’t qualify for these advertised rates.

Prevu is still a relatively small company with a limited pool of in-house agents. Because there are fewer agents, customers may not be able to change agents.

Like at some other discount brokerages, you may receive less one-on-one support from Prevu than you would with a traditional realtor. Prevu agents take on a lot of clients, which leaves them with less time to provide personalized attention to each buyer and seller.

Prevu is available in select markets in Washington D.C. and the following states: California, Colorado, Connecticut, Florida, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Texas, Virginia, Washington.

FAQ about real estate commission

What is a 3% commission realtor?

A 3% commission realtor is a real estate agent who charges listing fees that align with the industry average. Traditionally, a standard listing fee was 3% or more of the home's sale price. These days, many agents charge a bit less — typically in the range of 2.5–3%. On average, real estate commission rates nationwide for the seller stands around 5.49%.

Is a 3% commission a lot?

A 3% commission has long been the industry standard. However, technology and innovation have made home selling more efficient, and 3% may no longer be a fair real estate commission. Most home sellers can find better value with a top low-commission realtor who offers full service.

What percentage do most realtors charge?

In the U.S., traditional realtors charge 4.45–6.34% in total real estate commission. This commission is split between the listing agent (who takes an average of 2.72%) and the buyer's agent (who takes an average of 2.65%). These rates can vary depending on your location. Learn more about real estate commissions rates by state.

Do all realtors make 3%?

In the U.S., traditional realtors charge between 4-6% in total real estate commission. This commission is split between the listing agent (who takes an average of 2.83% and the buyer's agent (who takes an average of 2.66%). These rates can vary depending on your location and other factors.

What is the lowest commission a realtor will take?

The lowest commission full-service realtors accept is usually 1.5% of a home's final sale price. This discount is significant compared to the average real estate commission of 2.5–3% charged by a traditional agent. The best way to pay less in realtor commissions is to work with a low-commission real estate brokerage. Top companies offer listing fees as low as 1.5% and match you with the best local agents.

Can I get a 3% total real estate commission?

For most sellers, paying a 3% total commission is impossible as it includes paying two agents. However, you can get close to this rate by listing your home with a low-commission realtor who charges a 1.5% listing fee and offering a 1.5-2% buyer's agent fee. 

The best discount brokers have found ways to lower their listing fees with few (or no) customer service trade-offs, which makes them a great option for most people. But whether it makes sense to offer a below-average buyer's agent fee depends on commission rate trends in your market and buyer demand in your local area.

Related links

Article Sources

Better real estate agents at a better rate

Enter your zip code to see if Clever has a partner agent in your area
If you don't love your Clever partner agent, you can request to meet with another, or shake hands and go a different direction. We offer this because we're confident you're going to love working with a Clever Partner Agent.