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What Are Normal Realtor Fees?

Buying or selling a home may be the most important financial transaction most people make in a lifetime. This is why people use realtors to ensure the transaction is successful. Of course, realtors don't work for free. Get the lowdown on normal realtors fees and how they are paid.
What Are Normal Realtor Fees?

Most people who are buying or selling a house work with a realtor for a good reason. A top agent can help sellers get the most for their house and help buyers find the house they want within their price range.

Since sellers pay for both the listing agent's and the buyer's agent's commission, normal realtor fees can take a huge chunk out of a home sale. If you want all the services a traditional realtor provides for less, a low-commission agent can save you money and make budgeting for real estate costs that much easier.

> Find out how to save up to 50% on commissions.

To find out why a low-commission agent is a great choice, it's important that you understand what normal realtor fees are and why they seem so expensive.

What are realtor fees?

Realtor fees are costs of doing business with an agent. When you use a realtor to either sell or buy a home, that realtor needs to be paid for the job they do. Since agents work on commissions, they're only paid when a home sells.

The fee that realtors are paid is a percentage of the sales price of a home. Realtors fees are paid during the closing process of a real estate transaction.

What are normal realtor fees?

Normal realtor fees are calculated as a percentage of the sales price of the home. The seller pays the fees to their agent as a part of the seller's closing costs. Then the seller's agent splits the commission with the agent who represented the buyer, meaning the buyer often pays nothing in realtor fees.

Normal realtor fees are much higher than the fees charged by full-service flat-fee or discount agents.

What percentage do most realtors charge?

While realtor's commissions can vary depending upon location and the type of property for sale, most full-service traditional realtors charge 5%-6% of the selling price of the home. The realtor fees are taken from the proceeds of the sale of the house.

Half is paid to the seller's agent and half is paid to the buyer's agent. For example, a $400,000 house would net $24,000 in total realtor fees. Each agent would earn $12,000 on the sale.

Are realtor fees negotiable?

Sometimes sellers can negotiate realtor fees. However, some agents won't negotiate with you and some agents can't afford to. Their brokerages may have a minimum requirement that they want their agents to charge on a sale.

Agents who have to split a high percentage of each sale with their broker may be less willing to negotiate.

However, agents may be willing to negotiate if the home has a high sales price or their client uses one agent for multiple transactions such as selling one house and buying another.

How are realtor fees calculated?

Realtor fees depend on the sales price of the house. Once the home sells, you can calculate your commission costs based on the percentage in your listing agreement.

Unless an agent has their own brokerage license, each agent will pay a percentage of their fee to their brokerage. Depending on the arrangement with the broker and the agent's experience, an agent might keep anywhere between 60%-90% of the realtor fee.

For example, if the seller's agent's fee is 5% and the sale price of the house is $500,000, the total realtor commission on the sale would be $25,000. This is then split between the buyer's agent and the seller's agent who would each get $12,500. If each agent then has to pay 40% to their brokerage, each agent would net $5,000.

Who pays realtor fees?

It's considered common practice for the seller to pay the commission fees as part of their closing costs. However, in anticipation of having to pay the realtor fees, sellers will try to include the estimated amount of the realtor fees in the sales price of their house.

Sellers

Sellers need to factor in the dollar amount of real estate commissions when estimating their closing costs for the sale of the house. The more a seller can get for their house, the more they will have to pay in realtor's fees. It's kind of a Catch-22.

But there are ways that sellers can save on commissions.

Buyers

Buyers may think they are off the hook for realtors fees but what many buyers don't realize is that realtor's commissions are generally factored into the sale price of the house. Therefore, the buyer ends up paying for the realtor fees indirectly. Even though commissions are technically pulled from the seller's proceeds of the sale, sellers compensate for this by listing for a higher price.

Can you save on realtor fees?

You absolutely can save on realtor fees and get the full-services of a top market realtor by using a full-service, low-commission agent. A full-service, low-commission agent provides all of the services that a traditional agent does for a commission rate lower than the normal 5-6%.

Clever partners with top, local agents and pre-negotiates lower listing commissions for sellers. This way sellers can save up to 50% on realtor fees while receiving all the assistance of a knowledgable agent.

When you use a Clever Partner Agent to sell your house, you pay the listing agent a flat fee of $3,000, or a low commission rate of 1% if the house sells for $350,000 or more.

Find a Clever Partner Agent in your neighborhood and find out how much you can save and get the best price possible for your home.

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Andrew Schmeerbauch
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.

See all Andrew's Posts
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