When you sell you home, realtors fees often amount to the majority of your closing costs, so it's important to understand the average commission rate and who the money is going to. With this knowledge, you can evaluate cost-saving options and choose the best option for you.
If you're planning on selling your home and want to walk away with more money, get in touch with an expert in your local market to find out how much you can save on realtor fees.
In the meantime, here's a breakdown of realtor commission fee percentages:
How are realtor fees calculated?
Real estate agents typically charge 6% of the total sales price. Of course, depending on the location of the home and the local market, this can fluctuate. For example, if there is a lot of competition between local realtors, they might lower their commission percentage to get more business.
Realtor use the commission fee to cover things the costs of selling your home, for example, professional photography, marketing material, and holding open houses. The commission also covers their income as a realtor since most make the majority of their money through commissions.
If you're thinking about selling your home and plan to interview realtors, be sure to remember that some realtors will be open to negotiating their fees regardless of the current market — you just have to ask. However, know if you negotiate a discount with a real estate agent, it is unlikely they'll go below 5% total.
How are realtor fee percentages divided?
When a seller list their house with an agent, they negotiate the agent's commission, how long the agreement will last and the scope of the agent's duties. Since the total commission percentage will be split between the listing agent and the buyer's agent the agreement will also lay out how much each agent receives.
When the listing agent enters the home on the local MLS, it will include the amount of the buyer's agent commission as a way to encourage these agents to show the home to clients.
For example, if the total commission is 6% and the listing agent agrees to give the buyer's agent 3%, buyer's agents will see that in the MLS listing.
How much do brokers get from agents?
How much an agent pays their broker varies, but typically ranges from 50% of their total commission, to 20%. Seasoned agents who have a higher sales volume tend to have a better split. On the other hand, newer agents who require a lot of support from the broker will have lower splits, and as a result give more of their commission to their broker.
Typical Realtor Fee Percentage Breakdown
Let's assume a seller lists their home with an agent and agrees to a 6% commission. For a home priced at $250,000, the seller will pay $15,000 in total commissions. If each agent receives 3%, they'll get $7,500.
The brokers would then take their cut depending on the agreement with the agents. Let's say the buyer's agent is a newer realtor and has a 50/50 split with their broker. On this transaction, the agent would walk away with $3,750.
In this example, the listing agent has more experience and has a 70/30 split with their broker. They would earn $5,250 from the sale of the home.
Cost-Cutting Realtor Fee Alternatives
Selling your home “For Sale By Owner” is one way to eliminate listing agent fees. FSBO means selling your home on your own with no professional help. Since you don't hire an agent, there's no one to pay a listing commission to.
However, you'll be responsible for researching the market, deciding your list price, devising a marketing strategy, showing the property, and handling all negotiations and sales contracts.
It is important to note that even selling as FSBO you will likely have to pay the buyer's agent a commission, so you will probably still have to pay at least 2.5% in realtor commission. If you refuse to offer a buyer's agent commission, they may avoid showing your home to their clients.
A discount broker provides agents who sell your home for a reduced rate.
There are many reasons why a real estate agent may choose to work for a discount broker. For example, if they are newly licensed and need to get some experience, working for a lower commission can draw in clients.
Some discount brokers offer a limited scope of services at a discounted rate, such as putting the listing on the local MLS but letting the owner handle showings.
Low-Commission, Full-Service Agents
Low-commission, full-service agents do exactly what their name suggests — they offer a full-service experience which includes all of the things a traditional realtor would take care of, but for a lower commission rate.
This is often the best of both worlds for sellers, because they don't have to worry about showing or negotiating the sale of their own property and get to save a sizeable chunk of money.
For example, Clever partners with full-service agents from well-known national brokerages (Century 21, Keller Williams, etc.) who work with sellers for a flat fee of $3,000 or 1% of homes over $350,000.
This can save you up to 50% in commissions without sacrificing the level or amount of service you receive.
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FAQs About Realtor Fee Percentages
What is a typical realtor commission?
A typical realtor commission in the U.S. is between 5% and 6%. This it typically split equally between the listing agent and the buying agent.
Are realtor fees negotiable?
There are no steadfast rules that state how much a realtors commission must be, making commissions completely negotiable. However the extent that agents are willing to negotiate varies considerably. It is also important to note that some brokerages may not allow their agents to negotiate their commission enough to make a difference to you.
Do buyers pay realtor fees?
Buyers do not directly pay realtor fees, however sellers may increase the asking price of their home to help them cover commissions. Therefore the cost of the agents commission is typically rolled into the sales price.
If you're thinking about selling your home and would like some advice, reach out to one of our Clever Partner Agents who can give you professional advice on how to sell your home while saving as much money as possible.