Updated May 15th, 2019

Ready to jump in head first to selling your home? Before you immediately list with the first realtor you can, do your research! Understanding a bit about what your realtor will do for you and how much money they’ll get in return is a great way to ensure that you’ll have an enjoyable experience. When working with a large chunk of change like the one that comes from selling your house, you can never be too careful. Let’s start with the commission.

What is a commission and how does it work?

When selling your house and hiring a realtor, you will probably come across the word “commission.” So what is it? A commission is a percentage of sales that goes to the person selling the product or service. In real estate, real estate brokers make a set percentage of the sale price of the house in compensation for services rendered. These services include listing your home, putting up signs for your home, holding open houses, printing marketing materials, and negotiating the sale price. Both the listing agent and the buyer’s agent split the commission for the sale of a home. In cases where there is only one agent, the seller retains half of the commission. The commission rate and division are usually outlined in the contract for the sale of the house.

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What is the average commission for selling a house?

The industry standard rate for a commission is 6% split between both the buyer’s and the seller’s agent. The commission rate started in the 1960s and has stayed the same, despite the rise in home sale prices. While the commission rate is negotiable (and about 80% of Americans are negotiating the commission rate), the seller’s agent usually makes between 3%-4% of the sale of the home, and the buyer’s agent makes between 2%-3%.

As more and more commission negotiations are taking place, it is becoming quite common to see people turn to flat rate agents who provide some or all the services provided by a full-service agent for a smaller flat fee, rather than charge a large percentage as a commission.

What is the average cost of using a realtor?

As the price of homes increases, so does the average commission fee realtors receive. With the average home in the U.S. selling at around $228,200, the seller can expect to pay as much as $13,692 of their profits to realtor fees. If you are selling a piece of vacant land, the percentage increases to 10% or even 20%, making the payment on a $40,000 plat cost as much as $8,000.

Do real estate brokers make a salary on top of their commission?

In some industries, sales employees make a base salary and then a commission off of every product or service sold. That’s not the case in real estate, however. Real estate agents work for a brokerage, and the brokerage provides benefits to the real estate agents for a percentage of every commission the agent receives. In other words, the real estate agent doesn’t even get to keep all of their split in the commission. The brokerage typically retains 30% to 60% of the commission to pay for marketing supplies and brokerage fees.

How do I save money on commissions?Save money real estate fees

6% off the sale of your house is a lot of money for anyone, and the higher the selling price, the more money it will be. So how do you offset some of those costs? Do you have to pay a commission? There are a few ways you can reduce the costs of commission in real estate.

List with a Flat Fee Real Estate Broker

The first thing you may want to try is listing with a flat fee real estate broker. Using a full-service, flat fee real estate broker means you end up paying a maximum 1% of your sales while still reaping the benefits of working with a real estate broker. Make sure you do your research, though! Not all flat fee real estate brokers are full-service, meaning you do more of the marketing, scheduling, and document gathering.


Another option worth considering is negotiating your realtor’s commission rate. Make sure to choose your negotiations wisely. If the market has a low supply of homes available, the realtor would be crazy not to accept a smaller commission rate on a home that is going to sell in no time flat. If you try to negotiate with the commission of a house that is more difficult to sell, however, you may end up compromising on service. Additionally, be careful not to go with the realtor who is chomping at the bit to lower their rates. Some agents will do the minimum amount of work they can get away with for a lower commission rate. Make sure you are still getting high-level service for the price you are paying.

For Sale By Owner

An option that many consider, putting your home on the market yourself in an act to save money may not be the right strategy. Many buyers put offers on homes listed For Sale By Owner that is far less than asking price, just because the owner is saving money by doing it themselves. That, along with the amount of time, energy, and expertise put into selling your home, and it often turns out to cost more than hiring a traditional agent. There are many ways to save on commission, but selling your home yourself isn’t one many recommend.

Selling your home for the first time is a daunting and exhilarating task. If you danced when you found out how much money you’ll make from selling your house, and then stomped on your hat when you heard the commission rates, you’re not alone. Although the price you’ll pay in commissions when you sell your house varies based on the amount, it sells for, doing your research in advance can help you significantly cut the commission costs and put more money back in your pocket.

Looking for a way to save on realtor fees? You need Clever. We have local full-service agents from a major brand that will list your home for a flat fee of $3,000 (1% for homes above $350,000). Reach out to us at 1-833-2-CLEVER or complete our online form to get connected a top-rated local agent that will list your home with a discounted commission rate.

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