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What are Typical Realtor Fees?

When tallying up all the costs to sell your home, you may have pushed off looking at what you’ll owe in realtor fees — you know the total is probably going to sting. So how much will you actually be paying in commission? Learn about typical realtor fees and if there’s a way you can lower them.
What are Typical Realtor Fees?

Exciting as it is to finally sell your home, you know the process won't be cheap. Along with a slew of costs (staging fees, repair costs, and moving expenses, etc.) you'll also be on the hook for realtor fees.

Typically, realtor fees add up quickly, but you do have options to mitigate some of your costs. You can work with a full-service, discount agent and save thousands of dollars.

Get connected with a top-rated local agent for a free, no-obligations consultation on how you can save money while selling for top dollar.

To give you an idea of how much you can really save, here's what you need to know about the typical realtor fees.

What are typical realtor fees?

The main realtor fee that you've been mentally preparing for is the commission fee. Instead of a salary, the majority of realtors work solely on commission; typically sellers pay 6% of the price of their home in commission, with both the listing agent and the buyer's agent splitting the moeny.

For instance, if the sales price of your home comes to $250,000, with a 6% commission, you'll be paying $15,000 in commission. Each agent will walk away with $7,500.

Commission traditionally covers your realtor's services from listing your home on the multiple listing service (MLS) and conducting a comparative market analysis (CMA) to accurately pricing marketing, and showing your home. Your agent will also handle negotiations and closing paperwork.

Another realtor fee many don't remember to factor in are transaction fees. Usually bundled in with other closing costs, transaction fees, or broker service fees, are costs related to closing a real estate transaction such as processing paperwork, document storage, and additional administration work.

Your real estate agent's brokerage (the company they work for) requires the agent to cover the transaction fees and so, those costs are then passed on to you which can add up to anywhere from $295 to $625.

What is a typical realtor commission when selling a house?

While the typical realtor commission is 6% of the total sales price, there is no set rate for commission.

The idea of a 6% commission rate has been around since the early 1900s when the real estate industry was truly beginning to take shape. However, after a price-fixing scandal with realtor commissions in the 1950s, the Supreme Court ruled there can be no fixed commission rate.

And while the ruling was clear, most realtors still continue the tradition of a 6% commission. However, sellers can always attempt to negotiate for a lower commission rate.

For instance, you may be able to negotiate for a lower rate if your realtor is representing both you and the buyer, also known as dual agency. Or if your home is priced high and will sell quickly, your agent can still receive a decent commission even at a lower rate.

Additionally, many realtors who are willing to reduce their fees work with partner networks that provide them with qualified, vetted buyer and seller leads. This helps the realtors save time, money, and resources on client acquisition, allowing them to work with a higher volume of clients and lower their fees.

Typical Realtor Fee Breakdown

The amount you pay in commission may feel hefty, especially with the traditional, standard rate, but in actuality, the real estate agent isn't pocketing the entire 6%. Rather, the commission is split, usually evenly, between the seller's agent and the buyer's agent so each walks away with 3%.

And the brokerage firm will want a piece of the action as well.

Each real estate agent and their brokerage have varying deals, usually depending on the experience and success of the agent, however, typically real estate agents can end up handing over 30% to 60% of their commission to their brokerage.

As the seller, you'll typically be responsible for paying the entire commission — covering both your agent's and the buyer's agent's commission. And don't worry, the funds to pay for commission fees aren't out of pocket. Your commission expense will be taken from the net profit off the sale of your home.

So if your home sells for that $250,000 at 6%, after deducting $15,000 in commission costs you'll be walking away with $235,000.

Commission fees are paid at closing once the sale goes through. At this point you'll also be on the hook for any transaction or brokerage fees along with additional closing costs that can include title insurance fees and transfer taxes.

What are the typical realtor fees when buying a house?

On the other side of the real estate transaction, buyers are spared the expense of paying commission fees directly. Technically, because the seller usually rolls the cost of commission into the listing price, buyers indirectly help to pay the real estate agents' commission if their offer is at or above listing price.

So while buyers don't cover commission, be prepared to help pay for brokerage fees as well as a number of closing costs.

What are typical closing costs?

Incurred by both the seller and buyer, closing costs are the fees associated with closing on a home and transferring the property over to the new buyer.

While sellers and buyers traditionally have separate expenses they're responsible for, closing costs aren't set in stone — you're able to negotiate who pays what and how much. These negotiations can be used by either seller or buyer as a tactic to help sweeten the deal.

For example, in a seller's market the buyer might offer to pay more in closing costs to stand out among other competing buyers.

Negotiations aside, there are typical closing costs associated specifically with the seller and others with the buyer. Here's what you can normally expect at closing.

Seller

Sellers can expect to pay between 6% and 10% in closing costs. In addition to both real estate agents' commissions, you'll be responsible for:

  • Transfer fees: The tax for transferring the title from you to the buyer.
  • Title insurance: A one-time payment that protects the buyer from any issues with your home's title such as liens or property ownership disputes.
  • Escrow fees: A fee to the escrow company that oversees the closing process as an independent third-party — typically split 50/50 between seller and buyer.
  • Prorated property taxes: You'll cover property taxes payments up until the date of the sale.
  • Repair costs: If you need to offer credit to the buyer for any added repairs found from the inspection.

While these are the main seller expenses during closing you might also need to cover any outstanding liens, attorney fees, or HOA fees.

Buyer

The list of closing costs may look more extensive for the buyer, but the buyer actually pays less than the seller with expenses between 2% and 4% of the purchase price. With the buyer, the majority of costs relate to lender fees.

Here's what the buyer can expect in closing costs:

  • Application fee: The cost for the lender to process your loan application.
  • Courier fee: The cost to transfer documents to complete the loan transaction.
  • Credit report: Fees for obtaining your credit report and history.
  • Home inspection: The cost for the home inspection to check for any needed repairs.
  • Lender's title insurance: This protects the lender in case something goes wrong with the home's title.
  • Origination fee: Typically 1% of the loan that covers the lender's administrative costs.
  • Underwriting fee: The cost for the lender to see if you qualify for the loan.
  • Prepaid interest: Your lender may ask for you to pay the interest that will accrue between closing and your first mortgage payment.
  • Recording fees: The cost charged by the city or county to record your property ownership.
  • Escrow fees: You'll pay half of the fee to the escrow company — the seller typically will cover the other half

In addition to these fees you'll also need to factor in homeowner's insurance, property taxes, HOA fees, attorney fees, and private mortgage insurance (PMI). Remember that some of these expenses will be recurring costs even after closing.

Can you save on realtor fees?

You do have some options when it comes to saving on realtor fees — you don't have to be tethered to the standard 6% commission rate. Here are several alternatives that will help you lower those commission fees.

For Sale By Owner (FSBO)

FSBO sellers elect to sell their home on their own without the help or expertise of a real estate agent. Going this route, you avoid paying the commission that would go to your agent.

Keep in mind, however, you'll still be responsible for covering the buyer's agent's commission as the buyer will likely be working with a realtor — you'll still have to shell out 3% in commission.

While you do save a little on commission, selling your home on your own can be challenging, time-consuming, and stressful.

Be prepared to take on the duties of a real estate agent including juggling buyer's offers, scheduling open house showings, negotiating, and handling detailed paperwork and legal documents.

Only around 7% of sellers go the FSBO route according to the National Association of Realtors. And those who do sell their home successfully, on average, sell their home for 25% less than those who work with a real estate agent. So you may initially save on commission, but ultimately, you'll lose more money in the end.

Negotiate commission

Again, while 6% commission is the common standard rate, by no means is this rate fixed. You can negotiate commission with your agent, however, your agent doesn't have to accept a lower rate.

Generally, you'll see agents lower their commission rate if they're representing both the buyer and seller, also known as dual agency. Or, they'll be more willing to negotiate if it's a hot seller's market and your home is worth a lot — the agent will be able to sell fast and still receive a decent commission even at a slightly lower percentage.

Work with a flat-fee agent

A flat-fee agent will help you list and sell your home for a straightforward, set fee rather than taking a large percentage of the sales price, saving you thousands on commission.

Flat-fee agents provide a varying degree of services, and depending on the agent you work with, they can range from several à la carte options to a full-service, flat-fee agent who offers the same benefits and value as a traditional agent.

With flat-fee agents it's possible to get the best of both worlds: full-service agents at a discount. And if this sounds good to you, Clever can help connect you with top rated, local agents who provide all the services of a traditional agent but at a fraction of the cost.

Clever Partner Agents work for a flat fee of $3,000, or 1% if your home sells over $350,000 saving you up to 50% in commission fees. If you're curious how much you can save with Clever fill out this form to get in touch.

FAQs About Typical Realtor Fees

Who typically pays closing costs?

Both buyer and seller will have to pony up at closing. For the buyer, closing costs can amount to 2% to 4% of the purchase price with expenses typically related to lender fees and receiving the mortgage loan.

For the seller, closing costs can add up to between 6% and 10% of the sales price. These costs include paying the typical 6% commission to both the seller's agent and the buyer's agent. Additional closing costs usually encompass title transfer fees and prorated taxes.

Is it OK to ask the seller to pay closing costs?

Who pays closing costs is negotiable. Asking a seller to cover certain closing costs is also known as a seller concession. But to convince the seller to concede and help pay closing costs can be a difficult sell.

As sellers are already paying a large chunk in commission fees, they may be reluctant to lose any more of their earnings from the sale. However, if the seller is motivated to sell quickly or it's currently a buyer's market where sellers might be struggling to sell their home, sellers are more open to the idea of helping to pay closing costs to seal the deal.

If the seller does agree to pay closing costs, note that they will only be able to contribute so much as lenders have set a limit on the amount a seller can contribute. For instance, with a FHA loan, the seller can contribute up to as much as 6%, but with a conventional loan, the seller can only provide up to 3% of closing costs.

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Jamie Ayers
Jamie Ayers

Jamie is the Director of Content at Clever Real Estate, the free online service that connects you with top real estate agents and helps you save thousands on commission. In the past, Jamie has managed columns for clients in a variety of leading business publications, including Forbes, Inc., CEO World, Entrepreneur, and more. At Clever, Jamie's primary goal is to provide home sellers, buyers, and investors with the information they need to successfully navigate the ins and outs of the real estate industry.

See all Jamie's Posts
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