5 Percent Real Estate Commission Explained


Clever Real Estate


November 24th, 2020


The typical real estate commission in the U.S. is 6%. Sometimes, you can negotiate with your realtor to get a commission of 5%, which can save you money. However, you need to understand why the agent is taking the lower rate and make sure you get the service you deserve.

Updated July 1st, 2019

Currently, the national average real estate commission rate is approximately 6%. This commission comes from the proceeds of the sale, so it’s paid by the seller.

As a home seller, it pays to get top-level service. The right selling agent can not only list your home for sale, but they will offer advice on pricing, hold open houses, and screen buyers to determine who’s serious.

The full-service experience doesn’t stop there. You also need someone to negotiate offers, work through contingencies, and make sure the deal meets all the legal requirements.

Sometimes you’ll see a lower commission fee advertised, such as 5%. This helps agents stay competitive in the real estate market. However, you want to make sure you’re still getting the services you need.

With a Clever Partner Agent, you never have to wonder. You can save significantly on real estate commissions while getting a high-quality full-service experience every time. Contact Clever to learn more today.

What is a Typical Realtor Commission?

The national average realtor commission rate is around 6%. Keep in mind that this 6% does not go to a single person. It’s split between the buyer’s agent and the listing agent. Each agent then pays a portion of their share to their real estate broker.

Realtors rarely have a salary — the agent’s commission is their only income.

Let’s take an example with real numbers. Let’s say the selling price for your home is $300,000. At that sale price, the 6% commission is $18,000. Each agent gets ~$9,000, and after they pay the real estate broker, they each take home $4,500 if they have a 50/50 split. That has to cover all of their expenses and is their only source of income. You can see why an agent might be reluctant to negotiate their commission.

Why Would an Agent Agree to a 5% Commission?

What commission you can negotiate depends on the real estate market and on the realtor themselves. If an agent agrees to 5%, they are giving 3% to the buyer’s agent (that doesn’t change) but only keeping 2% for themselves.

Sometimes a new realtor trying to break into the real estate market will take less for a few listings to get their name out. They are gaining experience. However, a new agent is not likely to give you the high-quality experience you deserve.

Other times a discount broker might offer a low fee because they are giving you very limited services. These discount brokers might just put your home on the multiple listing service (MLS) and do nothing else.

At that point, you must handle the home selling yourself. You will have expenses for marketing your home and it will take a lot of your time. And remember, at most you save 3% — you still have to pay the other 3% to the buyer’s agent.

It’s better to skip the negotiating and the cut-rate service and choose a Clever Partner Agent. They can take care of all the details, give you a high-quality full-service experience, and help you get the best sales price for your home. Best of all, you’ll save thousands compared to other realtor options.

How Do You Negotiate a Realtor Commission?

The first step to negotiating commission with your realtor is to find out if they are open to dropping their rates. Not all agents are, as we mentioned earlier. If your realtor won’t negotiate, interview other options.

Next, find out what you’ll give up to get a lower commission rate. What services will you receive and will they be executed at the highest level? Ensure your agent is experienced and not willing to give a low rate just to get started in the housing market.

It’s much easier to skip the negotiating all together and choose a Clever Partner Agent. You’ll pay less than 5% commission overall and you’ll still get a top-notch full-service experience from a highly rated realtor in your area.

Skip Negotiations and Get a Great Rate With Clever

Work with a top-rated agent and keep more of your profits in your pocket!

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

If you’re ready to sell your home quickly and for top dollar, you want to work with a Clever Partner Agent. They are well versed in your market and can sell your home effectively. With many red hot seller’s markets around the country, you may even get more than the asking price.

Clever Partner Agent charge a low flat fee of $3,000 or 1% if the home sells over $350,000. You’ll still pay the buyer’s agent commission, but you’ll save a ton on the listing commission. As of 2019, the average savings for sellers who listed with Clever was $10,000. That’s a lot more profit in your pocket!

Why are Clever Partner Agents willing to work for less? It’s because we help connect them with people ready to sell their home right now.

An agent spends a lot of (unpaid) time and money building up leads and hoping to meet someone who’s ready to sell a home. When they work with Clever, they get a steady stream of new clients and spend more time selling homes and less selling themselves.

When a Partner Agent can get clients using less time and money, they can pass those savings on to you in the form of a reduced commission rate.

How Much Will You Save When You Sell With Clever?

In the example earlier, we talked about the commission rate if you got a home sale price of $300,000. With a 6% commission, you’d pay $18,000. Even if you negotiate down to 5%, you’ll still pay $15,000.

With Clever, you pay 3% for the buyer’s agent and $3,000 for your listing agent. That’s only $12,000. You save $6,000 over a normal commission.

Don’t compromise on getting a high-quality full-service experience from an agent who understands your market. You can get everything you need for a great home sale experience while paying a fraction of the usual price.

Contact Clever today and we’ll be in touch to answer your questions and connect you with one of the top-rated Partner Agents in your area.

Top FAQs About 5% Real Estate Commissions

1. Do real estate agents make a base salary?

No, they do not. The commissions they make from helping clients buy and sell homes are the only income they have, and that income also has to cover their expenses.

2. Do Realtors make a lot of money?

Real estate agents work very hard and don’t make as much money as many think. They have to pay for subscriptions to the marketing tools they use and they share their income with their broker. They also have to pay to build their brand, cover car maintenance, and pay for gas that they use in their business.

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

If you sell FSBO you don’t pay a listing agent, but you have to do all the work to market your home to buyers and negotiate offers on your own. You can pay an attorney to handle the legal paperwork, and you probably must pay a 3% commission to the buyer’s agent.

4. Do buyers pay a commission to real estate agents?

In a typical home sale transaction, the seller will cover the full commission fee from the proceeds of the home sale. That said, many sellers will build the price of the commissions into the listing price for their home, so in that way, home buyers share in the realtor fees.

5. What fees do you pay when you sell a house?

At closing a seller pays all the fees they owe. These include realtor commissions, title insurance, their legal fees, and any sales-related taxes. Meanwhile the buyer brings money to cover the down payment, mortgage fees, their legal fees, and other closing costs.

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