6 Percent Real Estate Commission Explained

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Clever Real Estate

Updated 

February 13th, 2020

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6% is the current average commission fee for real estate sales in the USA. The commission is typically paid by the seller and split between the listing and buyer's agent. Many low-commission agents offer the same services for a significantly reduced cost. Here's what you need to know.

Updated June 28th, 2019

If you’re shopping around for a real estate agent, the commission fee is a top-of-mind concern for you. The most common agent’s commission structure you will find is 6% of the final sales price, paid by the seller and split between the listing agent and buyer’s agent.

With a top agent, you’ll get the professional help that you deserve, from pricing advice to marketing and holding of open houses. If you want the best service, you might think you have to pay the full 6% commission.

The good news is that when you get in touch with a Clever Partner Agent, you can get the same full-service experience with significant savings. You’ll pay only a flat fee of $3,000 for the listing agent (or 1% if the home gets a sale price over $350,000), along with the 3% for the buyer’s agent.

You can get a high-quality full-service agent while saving thousands!

What Is a Typical Realtor Commission?

In the U.S., the average commission rate for real estate agents is 6% of a home’s final sales price. This amount is divided between the buyer’s agent and the seller’s agent. From the ~3% each agent receives, they pay a portion to their real estate broker. As a result, many agents make about ~1.5% of a home sale once everything is said and done.

With real numbers, this means on a home sold for $325,000, a traditional agent would take home about $5,000.

Considering the amount of work your listing agent does to list your home, marketing, holding open houses, and fielding calls — along with negotiating the final price and contingencies — you can see why many realtors are reluctant to compromise their commission.

Why Would a Real Estate Agent Accept a Lower Commission?

You’ll see a variety of discount brokers advertising lower-than-average rates. You may wonder why they’d work for less money.

The reasons vary depending on the agent and the housing market. Sometimes a new agent will charge a low commission to get their name out in the market. While it’s appealing to save money, a new agent isn’t likely to have the home selling skills you need to sell your home quickly and for top dollar.

Other real estate agents will charge a low commission rate because they are offering very few services. For instance, they may put your home on the Multiple Listing Service (MLS), but after that the service ends. You must all the home selling yourself, and it doesn’t save you 6% — it saves you 3% at the most, since you’ll still need to offer a buyer’s agent commission.

Before you get too excited about an advertised low commission, take into account how much you’d save and what you’d give up in services or attention.

How Do You Negotiate a Realtor Commission?

The first step in negotiating a real estate commission is to ask the realtor if their rates are flexible. If not, interview additional agents until you find someone charges less.

Secondly, understand what you’re giving up for a lower commission. Understand what you may compromise by negotiating a lower rate. Will the agent still provide the same services as when they charge 6%?

If you want high-level service without all the negotiation hassle, consider working with a Clever Partner Agent, who will give you a full-service experience for a low flat fee.

Save on commission rates with Clever!

Get a full-service experience while saving thousands on your home sale.

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

What about a Clever Partner Agent? Why would they give a top-level full-service experience for a lower commission?

Most real estate agents spend a lot of money on marketing. They need to connect with many people to find a few who might want to sell a house.

When they work with Clever, we connect them with people ready to sell (or buy) a home. It saves them an incredible amount of time and money, and they can pass the savings along to you without compromising on service.

Clever can connect you with top-rated local real estate agents who understand the market in your area. The agents work for major brands, such as Keller Williams, RE/MAX, Century 21, and others.

While you still must pay the buyer’s agent commission of ~3%, you’ll pay a low flat fee to your listing agent of $3,000 or 1% if the home has a selling price over $350,000. As of 2019, home sellers who listed with a Clever Partner Agent saved an average of $10,000 per transaction.

How Much Will You Save When You Sell With Clever?

Earlier we talked about the traditional rate structure if your home got a selling price of $325,000. The commissions were $19,500, with $9,750 for both the buyer’s and seller’s agent.

With Clever, you’d pay $9,750 to the buyer’s agent, but only $3,000 to the listing agent. You save $6,750 — which is a lot of money to keep in your own pocket. You receive the same level and quality of service as any other full-service agent.

You can’t go wrong! ”Reach today and we’ll be in touch to answer your questions and connect you with a top-rated Partner Agent in your area.

Top FAQs About 6% Real Estate Commissions

1. Why are realtor commissions so high?

Real estate commissions are often perceived as too high by the general public, and especially by sellers who need to pay both agents. Powerful entities in the real estate business and large brokerages have set a standard for ~6% commission across the United States. Discount real estate agents are often unfairly discriminated against in transactions, as some brokers blackball them in order to keep commission rates (and their salaries) artificially high. Fortunately, you can save on real estate commissions by using a Clever Partner Agent.

2. Do realtors only get paid commission?

Yes, commission is the only income for a real estate agent in most brokerages. Considering the work they do, real estate agents don’t make as much money as you may think. They have to pay for marketing, pay subscriptions to the marketing tools they use, and they split their income with their real estate broker. They also have to pay for the car maintenance and gas 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 work to attract buyers and negotiate on your own. This can cost you a lot of money, since you have to pay for flyers, supplies for an open house, and other marketing. You will also have to pay an attorney to handle the paperwork, and you’ll still pay a ~3% commission to the buyer’s agent.

4. Do buyers pay commission to real estate agents?

In a typical home sale transaction, the seller covers the full commission fee from the proceeds of the home sale. However many sellers build the price of the commissions into the listing price for their home, so in a way, home buyers share in the realtor commissions.

5. Are realtor fees included in closing costs?

Yes, at closing, all fees are paid by the buyer and the seller. Sellers pay all of their expenses (including commissions) from the proceeds of the sale and the buyer brings money for a down payment, mortgage fees, escrow account, and more.

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