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3 Percent Real Estate Commission Explained

The national average for real estate commission is 6%. Some agents might accept less than that because of their experience, the specific listings, and how hot or cold the market is. You can always save by going with a flat-fee or low-commission agent. Here's how.

The national average for real estate commission is 6%. Some agents might accept less than that because of their experience, the specific listings, and how hot or cold the market is. You can always save by going with a flat-fee or low-commission agent. Here's how.

Updated August 13th, 2019

The average real estate commission rate nationwide is approximately 6%. This fee is typically split between the buyer’s and listing agents who handle the transaction.

If you saw a 3% commission advertised somewhere, chances are it’s only referencing the listing agent’s fee.

You’ll likely still be on the hook for the buyer’s agent commission (another ~3%), which was conveniently left unmentioned.

If you really want to save on commission fees without sacrificing service, your best bet is to work with an established agent referral network, like Clever.

Clever negotiates heavily discounted commission rates with top-rated, local real estate agents across the country. Our partners have agreed to offer full service and support for a fraction of their typical rate — a flat fee of $3,000, or just 1% if the home sells for more than $350,000.

> Get in touch to learn more and connect with low-commission agents near you.

Read on to learn the truth about 3% commission fees and how discount real estate really works.

What is a Typical Realtor Commission?

Nationally, the traditional realtor commission rate a seller pays is 6%. What many sellers don’t realize is that only half of that goes to the listing agent and the buyer’s agent gets the other 3%.

From there, each agent pays a portion to their real estate broker (often a 50-50 or 70-30 split), so a seller’s agent that charges 6% only takes home 1.5-2.1% of the selling price. If your home has a sales price of $250,000, they are taking home $3,750-$5,250 for all the work they’ve done for you.

Real estate agents are typically only paid on commission. Without a base salary, you can see why many agents are reluctant to accept a lower commission.

Why Would a Realtor Agree to a 3% Commission?

A 3% commission is rare, but this figure might be achievable depending on your local market, the listing, and the agent you work with.

Normally when a real estate agent advertises a 3% commission, they’re trying to catch your eye without giving you a discount. Instead of talking about the standard 6% commission, they share only the portion they will be paid, which is 3%.

Sometimes, listing agents who work with specific buyer’s agents may have an agreement where each side takes only 1.5% commission. However, this is rare, since setting a lower buyer’s agent commission disincentivizes home showings.

Why would a realtor agree to work for a lower commission?

Sometimes a new agent who is just getting started will take a low commission to get their name out in the market. They want experience with listings, so they will charge less. However, these agents likely can’t give you the full-service experience you deserve.

Most of the time, discount brokers willing to work for a low commission give you less help and fewer services. For instance, they may put your property on the Multiple Listing Service (MLS), but the service and support you get ends there. There’s no additional marketing, no open houses, and limited or no professional photography.

Before you get excited about winning a low commission, be sure you know what you’re giving up. It might turn out not to be worth it.

How Do You Negotiate a Realtor Commission?

Everything about a real estate deal is negotiable, including the commission of the real estate agent. The first step in negotiating a realtor commission is to ask if they will compromise. Not every agent is willing.

Secondly, find out what services they will provide for a lower cost. If you have to give up a large portion of advice, marketing, open houses, and positioning of your property, it may not be worthwhile.

The best option is to skip the negotiation and work with a Clever Partner Agent. These agents provide a full-service experience at a much lower cost than most agents.

How to Save on Real Estate Agent Commissions — Without Sacrificing Service

If you’re interested in saving money on your home sale without sacrificing the service you get from a high-quality agent, connect with Clever.

Clever will set you up with highly rated real estate agents in your local area. These agents work for major brands you’ve heard of, including Keller Williams, RE/MAX, Century 21, and others. The difference is that our Partner Agents have agreed to work for a low commission fee instead of charging 3%.

You still must pay the buyer’s agent ~3% — but the listing portion will be a flat fee of $3,000 or 1% if the home sale price is more than $350,000.

The result? You sell your home quickly and save thousands. As of 2019, sellers who list with Clever saved an average of $10,000.

Why are our Clever Partner Agents willing to charge less for a commission? Normally realtors spend a lot of time and money connecting with homeowners and talking to them about selling a home.

Agents who work with Clever get a steady stream of interested home sellers, which means they can spend more time on what they love to do — selling homes!

How Much Will You Save When You Sell With Clever?

If your home had a sales price of $300,000 with a normal agent, you’d have to pay 3% to both the buyers and listing agent. The fee would be $18,000 due at closing.

If you sold with Clever, the listing agent would get a flat fee of $3,000. The buyer’s agent would still get $9,000, for a total of $12,000. You’d save $6,000 on the sale, which is a lot more money going straight into your pocket. Best of all, you get these savings compromising nothing in terms of service and help selling your home.

Don’t compromise on getting a high-quality full-service selling experience. Don’t assume you have to pay full price for the quality you need. With Clever, you get everything you need at a fraction of the cost.

Ready to move forward? ”Fill and we’ll be in touch to answer your questions and connect you with one of our top-rated Partner Agents today.

Top FAQs About 3% Real Estate Commissions

1. Do real estate agents make a base salary?

No, they do not, except in special cases or arrangements. The only income they have are the commissions they make from helping clients buy and sell homes.

2. Do Realtors make a lot of money?

Realtors do a great deal of work for their clients, and as a result don’t make as much money as many think. They spend time marketing properties and answering a lot of questions from buyers and sellers. Real estate agents pay for their marketing, gas, and maintenance. They also have to pay for subscriptions to the marketing tools they use, and they share their income with their broker. Unless they sell a high volume of homes, it’s difficult to become wealthy as a realtor.

3. Does a for sale by owner (FSBO) seller pay realtor fees?

If you sell FSBO, you do not pay a listing agent, but you have to do all the work to attract buyers, filter out lookers from those who are serious, and negotiate on your own. You’ll need an attorney to handle the paperwork, and if there’s a buyer’s agent you still must pay a 3% commission for them. You’re doing a lot more work without saving much money.

4. Do you pay realtor fees when buying a house?

In most home sale transactions, the seller is on the hook for the commission fees. However, many sellers will build the price of the commissions into the listing price for their home, so in a way, home buyers share in the realtor fees.

5. Are realtor fees included in closing costs?

Yes, at closing, fees are paid by both parties. Sellers pay their expenses (including commissions) from the money they get for the sale and the buyer brings money for a down payment, fees, escrow account, and more. Closing is the time when realtor commissions will be taken out of the home price and paid to the listing agent, who will then split their commission with the buyer’s agent.

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Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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