Updated August 13th, 2019
If you're looking to avoid paying the standard 6% real estate commission, there are a few different options you can choose from:
- Pay a flat fee MLS service to list your home, then handle every other aspect of the sale yourself (also known as listing for sale by owner, or FSBO for short).
- Try to negotiate commission rates with a traditional agent yourself - this is easier said than done, and rate cuts typically yield reductions in service and support,
- List with a top-rated, full-service agent via an established referral network like Clever for a pre-negotiated flat rate, saving you up to 50% on home selling costs.
Clever will connect you with top-rated local agents who have already agreed to provide full service for a fraction of their typical rate.
Why would they agree to these terms? Simple. We send our partners a high volume of new business, which enables us to negotiate lower fees on your behalf - without sacrificing service in return.
Get in touch to learn more and connect with full-service, low-commission agents near you.
In the meantime, here's what you need to know about saving money on realtor commission fees to help you weigh your options and make the right decision, given your specific needs and goals.
What are realtor fees?
Realtor fees are the compensation realtors get for helping you buy or sell your house. It's typically a percentage of the sale of your house and is split with the buyer's agent.
Traditional agents charge about 2.5- 3% commission each, which amounts to about 6%. This contract is separate between the agent's brokers, and can't be negotiated by the buyer.
What's included in realtor fees?
Realtor's fees include all the services they provide for you. If they help you sell your house, they will market it, hold it open, and take care of the paperwork. Some agents will also pay for photography, marketing, staging, and other services related to the selling of your house.
On the buyer's side, they'll help you locate a house by using their network and advise you on each property.
What is the average commission rate for a real estate agent?
The average commission charged by real estate agents varies market by market, but that average is almost always between 5 and 6 percent.
The average rate of appreciation of real estate is only 3.7 percent, and when you take into account all of the costs of selling a home, it can take a couple years of home ownership to be able to sell your home and break even.
Saving on the commission is often the difference between selling your home for a profit or losing equity. It can also be the difference between buying another home of similar size or having enough for a down payment on a bigger home in a better area.
So how do you save on commissions?
Real Estate Agent Commissions Are Negotiable
Legally, setting commissions in a market is against the law. Agents aren't allowed to tell you that “in our market, the commission is X%.”
However, brokerages are allowed to set the commission that their agents offer when they sign an agreement to list your home.
This means you can shop around to find an agent that works for a brokerage that lets them negotiate. It's not uncommon to find an agent who is willing to reduce their commission, but their brokerage won't let them.
In order to properly negotiate your commission rate, it's important to understand how your agent is compensated, and how they incur costs.
How much commission does a realtor make on a sale?
Typically your agent will charge you a total commission, and keep a portion of it for themselves, and offer the rest to the buyer's agent. In some states, your agent is allowed to keep both pieces if they represent the buyer as well. It is common for your agent to split the total commission evenly with the buyer's agent.
Of the portion that your agent receives, they have to share it with their broker. How this is shared varies wildly from brokerage to brokerage. Some brokerages share commissions with their agent in the form of a percentage (80/20 and 70/30 in favor of the agent), while some new brokerages offer a flat fee to their agents, allowing them to keep more of their commission.
You can use the price of your home to calculate a rough estimate of how much your real estate agent will make on the sale of your home.
For more expensive homes, that number can be staggering. You can research the average time to sell a home in your area, and you now have a good idea of how much time it will take your agent, and how much they will make.
This gives you all the tools you need to successfully negotiate a lower commission rate.
Tips For Negotiating Commission With Your Agent
1. Shop around. By interviewing multiple agents, you can compare commissions, and are more likely to find an agent that is willing to negotiate and lower their rate.
2. Sell and buy with the same agent. If you're buying, mention to your prospective agent that you want to work with them on both transactions. This creates twice as much potential revenue for the agent, so even if they take a discount they can make it up with the commission on the buy-side (where the person you buy from, not you, will pay the commission).
3. Be a great client to work with. If you're willing to leave the house for showings and make your agent's job easier, they're more likely to negotiate.
4. Make cost-effective improvements. If you're willing to make upgrades before the sale, mention that as well. Spending money to make the home more appealing to buyers will make it easier to sell, giving you a better negotiating position.
Why Is A Full-Service Agent Important?
Saving on the commission is great, but you have to be sure you aren't sacrificing service in the process. Most sellers hire an agent because they aren't confident they can sell their home for the highest possible price on their own.
It's important to work with a professional agent that takes professional photos, has the experience to help market your home, and who knows how to negotiate with potential buyers when a home comes in.
Great agents have systems in place that allow them to sell lots of homes and still provide full service to their clients. These agents are able to discount their commissions and handle the subsequent increase in clients while still keeping their sellers satisfied.
Working with an agent also increases the odds that they will already be working with a potential buyer for your home.
The Clever Alternative: Save Thousands With A Full-Service Agent
Saving on commissions with a full-service agent doesn't have to be hard. Clever has a nationwide network of partner agents that will list your home with a full-service agent for a flat fee of $3,000, or 1% if your home is more than $350,000.
You'll receive full service from a top-rated, local agent in your area. That includes pricing, a CMA, professional photos, marketing, help with negotiations, inspections, paperwork, and everything else you need to close.
Click here to schedule a free, no-obligation consultation with a top-rated, local agent.