Traditionally, home sellers pay the realtor commission fees for both listing agents and buyer's agents. The industry standard 6% in realtor fees can result in a significant drop in their home profit margin at the end of the sale.
Luckily, a full-service realtor doesn't have to cost sellers 6% in commission fees; low-commission realtors offer the services that clients need at a discounted rate. You can work with a top agent in your area and save up to 50% on commissions.
Here's what you need to know about standard realtor fees when selling a home.
What is a standard realtor fee?
A standard realtor fee refers to the commission rate that a realtor makes on a home sale as either a buying or listing agent. The standard rate is typically 6% of a home's final sale price, however, it can be higher or lower because commissions are negotiable and not set.
The realtor commission fee is typically split evenly between both the buyer's and seller's agent during a home sale with each agent receiving 3%.
The median sale price in the United States is $235,500 according to datafrom Zillow. The realtor commission fees on a home of that price would amount to $14,130, to be split between both realtors.
However, agents don't typically receive the entire commission amount; the brokerage that an agent belongs to usually takes a cut of the commission.
What standard fees do sellers pay?
Sellers are responsible for paying realtor commission fees for both agents. Even if they sell their home For Sale By Owner, they will still need to cover the cost of the buyer's agent.
What standard fees do buyers pay?
Buyers are not responsible for paying realtor commission fees in a traditional home sale. However, some home sale prices have the commission fees built into the cost of the home. The seller lists for a higher price to account for commissions and the buyer indirectly pays the realtors.
How are realtor fees calculated?
The standard realtor fee on a home sale is around 6%, but agents are free to charge their clients more or less than this amount. To calculate realtor fees, simply multiply the commission rate, as a decimal (eg. 6% is .06) by the sale price of your home.
For example, if your home's sale price is $300,000 and you've agreed to pay 6% in commission fees, you'll pay $18,000 in commission on your home sale.
What are standard closing costs?
Closing costs are the expenses related to finalizing a home sale. As each home sale is different the closing costs on one home can be significantly higher than the closing costs of another.
Buyers pay between 2% to 5% of a home's purchase price in closing costs. However, sellers end up paying much more, as realtor commission fees are encompassed in closing costs. Sellers pay the commission fee of both the listing agent and the buyer's agent and other closing costs on top of that.
Who pays what closing costs?
Home sellers and buyers split closing costs and can negotiate who pays what at closing. Home sellers pay more in closing costs, but home buyers have more, albeit smaller, individual costs.
Here's what buyers and sellers can expect to pay in closing costs:
Closing Costs for Home Sellers:
- Half of the Escrow Fees (split with buyer)
- Document Preparation Fees
- Mortgage Loan Balances
- Real Estate Commissions
- Transfer Taxes
- Prorated Costs (utility bills, property taxes, etc.)
- Additional Fees (HOA fees, home warranty, title insurance, etc.)
Closing Costs for Home Buyers:
- Half of the Escrow Fees (split with seller)
- Lender Fees
- Home Inspection Costs
- Recording Fees
- Surveyor Fees
- Documentation Fees
- Additional Fees (HOA fees, home warranty, title insurance, etc.)
How can you save on standard realtor fees?
There are a number of ways to save on standard realtor fees, but it's important to make an informed decision when choosing which option is right for you. As a seller you can avoid realtor fees altogether by listing FSBO, negotiate for lower a commission, or work with a discount brokerage.
Are realtor fees negotiable?
Realtor fees are negotiable, but it's not easy to talk an experienced realtor down from their normal rate.
While it seems like realtors walk away with a large chunk of change, the commission is split by both the buyer's agent and the listing agent. Most often, a portion of the commission is reserved for the brokerage that the agent works under, meaning each agent makes less than you'd think.
Let's say a home sells for $250,000 and the collective commission rate is 6% of the home's sale price. Each agent would collect $7,500 in commission, 30% of the commission will go to the agent's brokerage, leaving $5,250 in commission for an agent. This commission represents months of work from listing to closing that the agent has put in on behalf of the home seller — it's a fair rate.
When asking for a lower commission rate, there should be an incentive for an agent to accept it, meaning your home should be in good shape and it should be a hot market. You'll have a much harder time convincing an agent to accept lower rates if it'll take months to sell your home because the market is cold.
For Sale By Owner (FSBO) means that a home seller is listing their home without the help of a realtor. By not utilizing a listing agent, the homeowner saves money on realtor commission fees. However, if your priority is making a profit on your home sale, then an FSBO isn't your best option.
According to data from the NAR, FSBO listings sell for about 25% less than their realtor assisted counterparts. While you may save on realtor commission fees, you'll likely miss out on thousands of dollars in profit when listing FSBO.
A flat-fee MLS listing service allows home sellers to work with an agent who lists homes on the MLS — and that's it. Home sellers are then responsible for covering the marketing of their home, negotiations, inspections, and closing all on their own, without the aid of a real estate agent.
Using a flat-fee MLS service is a great way to save on realtor commission fees, as agents are only handling one facet of selling the home. These companies can charge their clients a deeply discounted rate. Flat-fee MLS listings typically cost around $100, a bargain compared to a 6% commission rate.
Unlike a traditional home sale where an agent's commission comes from a successful home sale, MLS listing services fees are paid upfront. They make money whether your home sells or not, they don't have a stake in the success of your home sale. Plus sellers are responsible for every aspect of their home sale which can be overwhelming.
Clever Real Estate
Clever connects buyers and sellers with local agents who don't charge the traditional realtor fee rate. By partnering with high performing agents from brokerages like Century 21 and Keller Williams and matching them with prospective home sellers in their area, Clever streamlines the business process for agents.
This allows agents to focus on providing clients with an excellent selling experience, while saving them money on marketing costs. Those savings get passed on to sellers in the form of lower commissions.
Clever Partner Agents work for a flat fee of $3,000 or 1% of your home's sale price is $350,000 or more. That's a far cry from the industry-standard 6%.