Selling your home? Keep an eye on the costs, especially real estate commission rates. Typically, commission comes to around 5% of your home's sale price, slightly below the national average. Here’s what you need to know about 5% commission realtors:
- According to Clever's survey, sellers usually pay around 5.32% in total commission, covering both the seller's and buyer's agent fees.
- Similarly, our study found that most sellers (71%) who worked with an agent paid 5% or more in commission.[1]
- Traditionally, the seller pays it all, but changes may be coming due to the recent National Association of Realtors (NAR) lawsuit settlement. Industry experts think total commission rates could fall below 5%.
- It's possible to lower these costs. You can try to negotiate a lower rate with your agent. Or you can use a discount broker that charges less than typical rates.
Clever Real Estate can also help by securing a 1.5% listing fee with experienced agents from well-known brokerages like Keller Williams and RE/MAX. This approach offers you the expertise of a leading agent while keeping the listing fee well below the national average of 2.83%.
💰 Get a 1.5% listing fee — no negotiating required
How 5% realtor commission works
Understanding how a 5% real estate commission works is key when selling your home.
Before signing a listing agreement, the seller decides on the commission for their agent (the listing or seller's agent) and the buyer's agent. This decision sets the stage for how much each will be paid upon the home's sale.
- Listing agent's commission. This agent helps price, market, and sell the property. They usually earn between 2% to 3% of the sale price. According to Clever's survey, they earn about 2.83% nationwide. For context, Anywhere Real Estate (behind Coldwell Banker and Century 21) reported an average rate of 2.45%.[2]
- Buyer's agent commission. The agent who brings the buyer to the table also earns a commission, generally between 2.5% and 3%, with the national average at 2.58%.
- Total commission cost. For a home selling at $400,000 with a 5% total commission, the agents would earn a combined $20,000. The seller typically pays this amount at closing from the sale proceeds.
Understanding the 5% real estate commission helps sellers navigate their home sale with confidence.
Important update on realtor commission changes!
After losing a lawsuit over their practices in 2024, the National Association of Realtors agreed to change how real estate professionals do business.
As of August 2024, buyer's agents are required to sign an "agency agreement" before providing services to a buyer. This agreement has to specify what services the agent will provide, and how much they will get paid.
Real estate agents are no longer allowed to split commissions with one another. In the past, it was common for a listing agent to collect a 6% fee from the seller, and then split this fee with a buyer's agent who brought a buyer. Going forward, buyer's agents will have to negotiate their fee directly with the buyer they represent.
Learn more about how the lawsuit will impact buyers and sellers.
How to pay less than 5% real estate commission
| Option | Best for | Wrong for |
| Discount broker | Full-service agents at a lower cost | Sellers who want traditional brokerage services |
| Sell FSBO | Full control over a transaction | Sellers uncomfortable handling sale negotiations, paperwork |
| Cash home buyer | Fast, hassle-free sale | Sellers aiming to maximize sale price |
| Direct negotiations | Sellers comfortable with negotiation | Sellers who want a faster, more straightforward process |
Looking to sell your home and eager to save on commission without waiting for industry shifts? There are effective strategies to reduce those fees to less than 5%.
Option 1. Use a discount real estate broker
Discount brokers are your go-to for selling your home at a fraction of the typical commission rate. Where most brokers might charge an average listing fee of 2.83%, discount brokers often only ask for 1-2%.
This difference may not sound like much, but it could mean saving $4,000 to $8,000 on a $400,000 home sale. And the best part? The top-notch discount brokers ensure that saving money doesn't mean compromising on service or support. You'll still receive excellent assistance every step of the way, just at a lower cost.
Listing Fee
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Editor's Take
Overview
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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.
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Customer Rating
Editor's Take
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Ideal Agent is a solid option if you’re looking for a top agent. The company vets its realtors thoroughly, so you’ll likely get a quality agent.
However, you might not get to choose who you work with, since Ideal Agent usually has only one or two realtors in a given area. Even if you get a top-performing agent, there’s no guarantee that they’ll be the right fit for your sale.
Ideal Agent’s listing fee of 2% is a bit lower than the traditional rate. But if you want to save money, other brokerages offer even lower fees while still maintaining high-quality agents and service.
Pros
- It's easy to get matched with a real estate agent.
- The 2% listing fee is lower than the traditional rate.
- Customer service gets excellent reviews.
Cons
- You likely won't get to choose which agent you work with.
- There are no savings for buyers and limited savings for sellers.
- There's limited ability to manage your listing online.
Listing Fee
Customer Rating
Editor's Take
Overview
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Redfin is a reputable discount real estate brokerage that offers significant savings, particularly if you buy and sell with the brokerage. But watch out for high minimum fees, which vary by market and can be high in some areas. Redfin's agents also work with a lot of clients, and they don’t always have time to provide as much hands-on service as you may need.
Pros
- Redfin's low listing fee of 1.5% offers excellent savings.
- Clients who buy and sell with Redfin can save even more.
- You can easily manage your listing online or via Redfin’s app.
Cons
- Agents provide limited one-on-one service.
- Customer reviews have recently become more negative.
Option 2. Sell FSBO
Choosing to sell your house without a realtor allows you to bypass the typical listing agent fees, which average 2.83%.
FSBO appeals to those who seek full command over their home sale, presenting an opportunity to save on commission costs.
However, going the FSBO route requires careful consideration of whether the potential savings justify the additional efforts, time commitment, and risks of managing the sale yourself.
Keep in mind these two statistics:
- Studies indicate that homes sold through agents tend to secure nearly $50,000 more on average compared to FSBO sales.[3]
- Our research on FSBO statistics also reveals that over one-third (36%) of sellers make legal mistakes without professional guidance, highlighting the potential pitfalls of navigating a home sale without an expert.
Selling FSBO? Get your home listed on the MLS!
The MLS is a crucial tool in the real estate market. It is the primary database where agents search for properties on behalf of their clients. Being listed there significantly increases your home's visibility to potential buyers.
For FSBO sellers, the answer lies with flat fee MLS listing services. These companies offer a cost-effective way to list your home on the MLS for a low, one-time fee.
Flat fee MLS services not only put your property in front of a vast network of buyer's agents via the MLS but also ensure it appears on popular real estate websites like Zillow and Realtor.com, further boosting your chances of finding the right buyer.
Option 3. Sell to a cash home buyer
Selling to a company that buys houses for cash suits those looking for a quick and hassle-free sale. Here are the key points to consider.
Pros
- Fast closings (1-2 weeks)
- No contingencies, which reduces the risk of the deal falling through
Cons
- Usually pay below market value.
- Less flexibility in negotiating price and terms.
Compare offers from several cash buyers to get the best deal when selling your house for cash. You can do this with a realtor’s help or use a free service like Clever Offers to ensure you get a fair price.
Option 4. Negotiate with an agent directly
When working with a real estate agent, knowing that you can negotiate realtor fees is important. These fees can vary by location, the brokerage, and the services provided; there's always room to discuss a better rate.
However, knowing that not everyone succeeds in these negotiations is also crucial. According to an industry study, only 22% of home sellers could negotiate lower commission rates with their agents.[4] Preparing and understanding negotiation strategies is key if you're considering selling with a realtor and want to try negotiating fees.
FAQ
What exactly is a 5% real estate commission?
A 5% real estate commission typically occurs when the listing agent charges a slightly reduced commission, around 2–2.5%, and pays the buyer's agent commission. Under the traditional home sale, sellers are responsible for paying the buyer's agent commission (2.5–3%), bringing the total real estate commission to around 5%.
In today's real estate market, sellers pay an average of5.32% nationwide in commission fees. However, discount brokerages, such as Clever or Redfin, can offer big savings.
How is a 5 percent commission for a realtor split?
A 5% commission will generally be split between the listing agent and the buyer's agent. Nationwide, the listing agent earns slightly more (2.83%) compared to the buyer's agent (2.66%), although this may vary by market. Each agent may also split their commission with their respective brokerage.
Can I negotiate a 5% commission with a realtor?
You may be able to negotiate a 5% or lower commission with your realtor, but it depends on the price of your home, where you live, and average commission rates in your area, among other factors. To pay a 5% or lower total commission rate, you'll likely need to pay your listing agent a 2% commission — instead of the traditional 2.5–3% — while still offering a competitive buyer's agent commission.
However, real estate commissions are always negotiable; you may be able to negotiate a lower listing agent fee and try to offer a lower buyer agent's fee. However, it can be difficult to negotiate a lower rate with a traditional agent, and studies show most homeowners are unsuccessful. The best way to save on listing fees is with a low-commission real estate agent.
