What is a 4.5% real estate commission?

By 

Trevor Wallis

Updated 

March 15th, 2021

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How it works | Potential savings | Sell for 4.5% | Negotiation tips | Limited-service agents | Low-commission agents | 4.5% companies | Other ways to save

What is a 4.5% real estate commission?

In conventional real estate transactions, most sellers pay between 5-6% of their home's sale price in commissions. But getting that fee down to 4.5% by selling with a low-commission realtor or brokerage could save you thousands.

When you sell a $350,000 home at a 4.5% commission rate, for instance, you'll save upwards of $5,250 in realtor fees.

» SAVE: Sell with a top local agent for 4% total commission (or less!)

How does a 4.5% commission work?

Dropping your total commission from 6% to 4.5% can save you thousands of dollars. Here's how:

In most real estate transactions, the commission is taken out of the home seller’s proceeds and split between the two real estate agents involved in the sale:

  • The listing agent, who advertises the property for the seller
  • And the buyer's agent, who brings their client to purchase the property

In a conventional transaction with a 6% fee, each agent collects 3% of the home's sale price.

Fee
Rate
Listing agent’s fee
3%
Buyer’s agent fee
3%
Total commission
6%

But you don't have to watch 5-6% of your sale price disappear before it hits your bank account. Instead, you can sell your home for 4.5% total commission by working with a listing agent who lowers their rate to 1.5% and still paying a 3% fee to the buyer's agent.

Fee
Rate
Listing agent’s fee
1.5%
Buyer’s agent fee
3%
Total commission
4.5%

Why does the buyer's agent fee stay the same?

If you offer a low (or no) buyer's agent commission, agents will be less likely to bring qualified buyers to your property.

This fee is an incentive for buyer's agents to "sell" your home to their clients.

If you take away that incentive, your property will likely drop on most agents' priority lists. Instead, they'll point their clients to nearby homes that offer a competitive agent fee.

» READ: Do sellers pay buyer's agent commission?

Why do listing agents agree to lower their rates?

The savings from a 4.5% total commission often come by working with a listing agent who accepts a 1.5% listing fee. Offering this reduced commission helps the agent attract more sellers in a competitive market.

There are more agents vying for your business than ever before. And, with discount brokerages like Redfin becoming more popular, agents have to be flexible and creative with both pricing and services to stand out from their competition.

All this competition among listing agents shakes up longstanding pricing norms (like the 3% listing fee) and puts more money in your pocket when you sell your home.

» MORE: How much do real estate agents make?

How much can you save when you pay a 4.5% total commission?

Reducing your total commission to 4.5% could save you thousands of dollars compared to the typical 5-6% realtor fee.

Let's say you're selling a $350,000 home. If you offer a competitive buyer's agent commission and list your home with an agent who charges 1.5% commission, you could save upwards of $5,250 compared to a typical 3% listing fee.

Rate
Total*
6%
$21,000
4.5%
$15,750
Savings
$5,250
*Based on a $350,000 home sale

» LEARN: How to save big on realtor commission fees

How to sell your home for 4.5% commission

You have four options to lower your total commission to 4.5%:

Negotiate a lower commission with your listing agent

It's possible to talk a traditional realtor into a lower commission, but getting them to cut their fee in half will be tough.

Agents pay for a lot of expenses out of their own pockets when they list a home — plus, they split their commission with their broker. If they lower their listing fee from 3% to 1.5%, they could actually lose money on the sale.

That's a risk many aren't willing to take. Still, you could have a shot at negotiating a lower commission if you check one or more of these boxes:

  • You're selling an expensive home
  • Your area has high buyer demand
  • There's a lot of competition among agents in your area
  • You agree to buy and sell with the same agent or brokerage

» MORE: How to negotiate a realtor commission

Hire a limited-service real estate agent

Some listing agents charge a 1-2% commission but offer fewer services and less support to their clients.

Many limited-service agents use an a la carte pricing structure. Instead of paying for an all-or-nothing listing package, a la carte pricing lets you pick and pay for only the services you want the agent to handle — you'll take care of everything else.

Experienced sellers who are comfortable managing portions of their own sale could save a lot of money by taking this route, sometimes paying even less than 1% commission to their listing agent.

But keep in mind that you'll have to invest a lot more time and energy into the sale than you would if you hired a full-service realtor.

» LEARN: What is a limited service real estate agent?

Hire a low-commission real estate company

There are two types of low-commission real estate companies that can help you sell for a 4.5% total commission or less:

  • Discount real estate brokerages offer built-in commission discounts when you work with their in-house real estate agents. (Learn more)
  • Agent-matching services connect you (usually for free) with local real estate agents who will help you sell your home for a pre-negotiated listing fee.

Try Clever’s free agent-matching service

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

Companies that sell your home for 4.5% total commission (or less)

Company
Average savings*
Average rating
$7,375
4.9
$5,875
3.2
$6,375
4.6
$4,825
4.8
$2,450
4.9
$7,125
4.9
*Based on four different sale prices compared to a 3% listing commission

Clever Real Estate

Clever Real Estate is a free online concierge and agent-matching service that pre-negotiates 1% listing fees (or $3,000 for homes under $350,000) with top local real estate agents.

When you sell with Clever, you get full service and support — and you'll pay 3.5-4% in total commission when you offer a full, competitive buyer's agent commission.

This gives you the best chance of selling fast and for top dollar — while still saving you thousands in realtor fees.

Every Clever Partner Agent is a highly-rated agent from national and regional brokerages like Berkshire Hathaway, Coldwell Banker, Keller Williams, and more. When you sign up, you'll be able to interview several local agents and choose the one that best fits your needs.

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

Redfin

Redfin is a national discount brokerage with in-house agents who charge 1.5% commission for full-service listings.

Redfin sellers typically pay 4-4.5% in total commission when they offer a competitive buyer's agent fee. But, when you both sell and buy with Redfin, the company lowers the listing fee to 1%, bringing your total commission rate to 3.5-4%.

Working with Redfin can save you thousands of dollars, but you should be aware of the trade-offs. To make up for the reduced commissions, Redfin agents handle many more transactions than a traditional realtor each year. This extra volume could limit the agent's ability to provide dedicated support throughout your sale.

» MORE: Is Redfin right for you? Here's what you need to know.

Door

Door is a discount real estate brokerage offering 1.5% listing fees to home sellers in Texas, allowing you to sell your home for 4-4.5% total commission when you offer a full buyer's agent commission.

While Door's savings are legit, it handles your entire transaction remotely. Not getting any face-time with your listing agent is a big downside that should make you think twice about working with Door, especially when other discount brokers offer lower rates and better service.

» READ: Does Door really save sellers money?

Prevu

Prevu offers home sellers full-service support for a 1.5% listing fee. But the company has high minimum fees that could leave you paying a much higher effective commission rate if your home is less expensive.

However, if you do qualify for a 1.5% rate, you'll only pay 4-4.5% total commission when you offer a competitive buyer's agent commission. For sellers with high-value properties in one of its five markets, Prevu offers great savings. But everyone else can find more value from other discount brokerages.

» LEARN: Who should sell with Prevu (and who shouldn't)

SimpleShowing

SimpleShowing is a discount brokerage offering 1% listing fees for a total commission of 3.5-4%.

SimpleShowing is a relatively small brokerage operating in select markets in Florida, Georgia, and Texas. It offers genuine savings, but you might have a hard time finding an agent that's a good fit thanks to their limited number of agents. If you do, you may still have to sacrifice some hands-on support throughout the sale. SimpleShowing agents handle 20-25 transactions each year — nearly double the volume of a traditional realtor.

» MORE: Everything you need to know about SimpleShowing

Reali

You can sell your home for 4-4.5% total commission when you list with Reali. This California-based discount brokerage has a team of in-house real estate agents who will list your home for a 1% listing fee as long as you hit their $5,000 minimum commission threshold.

Reali currently only operates in California but offers legit savings for many sellers across the state. You'll want to crunch the numbers for your property to make sure you'll actually save money, though. With a $5,000 minimum, your sale price will need to be at least $500,000 to get a 1% listing commission. Anything under $165,000 will actually cost more than listing with a traditional realtor.

» READ: Should you really list with Reali?

Alternatives to paying a 4.5% real estate commission

You don't have to use a real estate agent to sell your home. There are several options that offer more control, convenience, or speed compared to a traditional realtor — but each option comes with its own tradeoffs.

Best commission savings: For sale by owner (FSBO)

You can handle the entire process yourself (and avoid any listing fees) by selling your home for FSBO.

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

You might choose FSBO if…
  • You want to avoid paying a listing fee entirely.
  • You're confident you can handle the entire sales process yourself.
FSBO isn't for you if…
  • You aren't comfortable negotiating contracts or handling closing on your own.
  • You aren't sure what your home's listing price should be.
  • You don't have the time to manage everything on your own.

Most flexible option: Flat-fee MLS companies

Flat-fee MLS companies list your home on the multiple listing service (MLS) — an agent-only local listings database — for a low fee.

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

You might choose a flat-fee MLS company if…
  • You're committed to selling FSBO but want your home to be as visible as possible to buyer's agents.
  • You want to avoid the negative stigma of FSBO while still handling the sale yourself.
Flat-fee MLS companies aren't for you if…
  • You need more guidance and assistance from a listing agent than a simple MLS listing.
  • You plan on purchasing a lot of a la carte add-ons that can drive up the cost to nearly the same as a full-service realtor.

Most convenient choice: iBuyers

iBuyers, like Opendoor and Zillow Offers, use technology to make all-cash offers on homes within specific markets.

» MORE: What is an iBuyer?

You might choose an iBuyer if…
  • You don't want the hassle of listing your home on the open market.
  • You're fine paying hefty service fees (usually 5-15%) to get an all-cash offer within 24-48 hours.
iBuyers aren't for you if…
  • You live in a rural area or a city where iBuyers don't operate.
  • Your home is older and doesn't meet an iBuyer's strict criteria for properties it would purchase.
  • Your biggest priority is saving money on realtor fees.

Fastest way to sell: "We buy houses for cash" companies

"We buy houses for cash" companies make all-cash offers on nearly any home, no matter its condition.

» MORE: Everything you need to know about "We buy houses for cash" companies

You might choose a "we buy houses for cash" company if…
  • You need to sell your property quickly, no matter the price.
  • Your property is either distressed or difficult to sell.
  • You don't have the resources or desire to get your home ready for the open market.
"We buy houses for cash" companies aren't for you if…
  • You hope to get market value for your property.
  • Your home is in good enough condition to sell on the open market.
  • You have the time and opportunity to sell using another option.