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How the 3% commission model works | 3% buyer’s agent fee | 3% commission calculator | Average realtor fees near me
A 3% real estate commission has long been the standard rate a home seller pays each agent involved in their transaction. Most sales involve two agents — a listing agent and buyer’s agent. When each realtor earns 3%, the home seller pays a 6% total commission fee.
However, average commission rates are on the decline. Rising home prices and increased competition among agents are making standard 3% realtor fees harder to justify. These days, most sellers pay less than 6% total.
Read on to learn more about how the traditional 3% commission model works, as well as several different ways to cut realtor commissions in half.
We also partner with Clever Real Estate to offer one easy option you should explore first: Clever uses its size to negotiate on behalf of home sellers like you to get top-rated local realtors to work for just a 1.5% listing fee. Click here to instantly request local agent matches in your area, with no obligation.
How the 3% commission model works
When you sell a house, you’ll typically pay each agent involved in the transaction a 3% commission fee. A conventional home sale usually involves two agents:
- Your listing agent gets a 3% listing fee for helping you market and sell your home.
- The buyer’s agent gets a 3% buyer’s agent fee for bringing the buyer to purchase the home.
Home sellers almost never pay realtor fees out of pocket. Most agents only charge a commission at the completion of a successful sale, and both agents’ fees are deducted from the sale proceeds at closing.
Example of commission breakdown for a $300,000 home
Agent | Fee | Cost |
---|---|---|
Listing agent | 3% | $9,000 |
Buyer's agent | 3% | $9,000 |
Total commission | 6% | $18,000 |
» MORE: Who pays realtor fees (and how much do they cost)?
Can I pay a 3% total commission rate?
Yes, it’s possible to pay a 3% total real estate commission fee when you sell your house. But, depending on your situation, it could result in an extended timeline or lower sale price.
Pay both agents a lower commission
One way to reduce your total commission to 3% is to pay both your listing agent and the buyer’s agent a lower rate.
However, advertising a lower buyer’s agent fee gives agents less incentive to show your home, which could make it more challenging to find a buyer. This approach is especially risky if you’re in a slower market or your home is in less-than-perfect shape.
The best way to save money on realtor commissions is by listing with a low-fee realtor and offering a competitive buyer’s agent commission. This will reduce your overall commission, but ensure that you still get the maximum number of buyers to look at your home.
We recommend starting your search with our partners at Clever Real Estate. Clever negotiates 1.5% listing fees with top agents from trusted brokerages like Keller Williams, Berkshire Hathaway, and RE/MAX. Requesting agent matches is free and comes with no obligation. Interview as many agents as you like until you find the right fit, or walk away at any time.
Eliminate one agent from the sale
Another option is to eliminate one agent’s fee altogether. You may be able to do this through dual agency. This is when a buyer works with your agent instead of hiring their own. Because the same real estate agent represents both parties, you pay a commission to only one agent rather than two.
Alternatively, you could list your house “for sale by owner” to avoid paying a listing fee, but you’d still be on the hook for a standard buyer’s agent commission.
Although either strategy could potentially save you money on realtor fees, both are extremely risky for most home sellers. Dual agency creates a conflict of interest for your agent — they have to represent you and the buyer equally, so they can’t advocate for your best interests during negotiations. And research shows that sellers typically end up with a much lower sale price when they sell without an agent.
» MORE: Better strategies to save on realtor commission
Why do sellers usually pay a 3% buyer’s agent fee?
As a seller, you pay the buyer’s agent fee to:
- Motivate buyer’s agents to show your home to their clients
- Compensate the buyer’s agent who helps you find a buyer
A typical buyer’s agent fee is 2.5–3% of the home’s sale price, but the rate varies based on market conditions and your location. Your agent can tell you what the typical rate is in your area. You and your agent will specify the buyer’s agent commission in the listing agreement.
If you don’t offer a competitive buyer’s agent fee, buyer’s agents could deprioritize showing your home. They may favor properties that will better compensate them for their work. As a result, you may receive fewer or lower offers.
3% commission calculator
To find out how much selling with a 3% commission realtor could cost when you sell your house, fill out the calculator below. Adjust the sale price, listing fee, and buyer’s agent fee to see how they affect your net proceeds.
*Based on average seller closing costs nationwide. Learn more about closing costs.
As you can see, even a small reduction in your agent’s commission rate can yield big savings.
For example, on a $400,000 home sale, dropping your listing fee from 3% to 1.5% would put an extra $6,000 in your pocket at closing.
Why do realtors make 3% commission?
A 3% realtor commission is a longtime industry standard. Real estate agents typically don’t get paid until you close on a home sale or purchase. This means they invest a lot of time and out-of-pocket money on behalf of their clients, with no guarantee of payment.
For example, listing agents cover the upfront cost for services like professional photography, MLS listing fees, and marketing for your home. Buyer’s agents don’t face as many direct out-of-pocket expenses, but they may spend days or weeks showing you houses, helping you submit offers, and negotiating on your behalf.
If your home doesn’t sell or you change your mind about buying, your agent won’t get paid. Over time, the industry settled on 3% as a commission rate that realtors and customers alike felt fairly rewarded agents for the time, effort, and risk involved with real estate transactions.
However, real estate commission rates have begun declining in recent years — and it’s becoming less common for agents to charge full 3% fees. Home prices have jumped more than 80% over the past decade, so agents can charge lower rates but still earn the same amount of money from a sale.
Technology is also making the home selling process more efficient, allowing agents to close more deals without compromising on customer service.
» MORE: Learn how to compare agents and choose one
Is the average real estate commission rate less than 3% near me?
Today, the average total commission rate nationwide is 5.37%, indicating an average of 2.69% per agent — lower than the longtime 3% standard rate.
But commission rates often vary by state, depending on local market conditions including home sale prices, supply and demand, cost of living, and other variables. Find your state in the table below to see the typical fees in your area.
Average real estate commission rate by state
State | Avg. seller's agent commission | Avg buyer's agent commission | Avg. total commission |
---|---|---|---|
Alabama | 2.8% | 2.8% | 5.6% |
Alaska | 2.6% | 2.6% | 5.2% |
Arizona | 2.6% | 2.7% | 5.3% |
Arkansas | 3.1% | 2.8% | 5.9% |
California | 2.5% | 2.4% | 4.9% |
Colorado | 2.7% | 2.8% | 5.5% |
Connecticut | 2.6% | 2.8% | 5.4% |
Delaware | 2.9% | 2.8% | 5.7% |
Florida | 2.7% | 2.7% | 5.4% |
Georgia | 2.9% | 2.9% | 5.8% |
Hawaii | 2.6% | 2.6% | 5.2% |
Idaho | 2.8% | 2.8% | 5.6% |
Illinois | 2.7% | 2.5% | 5.2% |
Indiana | 3.0% | 2.9% | 5.9% |
Iowa | 3.1% | 2.8% | 5.9% |
Kansas | 3.0% | 3.0% | 6.0% |
Kentucky | 2.9% | 2.9% | 5.8% |
Louisiana | 2.6% | 2.6% | 5.2% |
Maine | 3.0% | 2.5% | 5.5% |
Maryland | 2.6% | 2.5% | 5.1% |
Massachusetts | 2.7% | 2.3% | 5.0% |
Michigan | 3.0% | 3.0% | 6.0% |
Minnesota | 3.0% | 2.7% | 5.7% |
Mississippi | 2.8% | 2.8% | 5.6% |
Missouri | 3.1% | 2.8% | 5.9% |
Montana | 2.9% | 2.6% | 5.5% |
Nebraska | 3.0% | 2.3% | 5.3% |
Nevada | 2.5% | 2.5% | 5.0% |
New Hampshire | 2.5% | 2.3% | 4.8% |
New Jersey | 2.6% | 2.6% | 5.2% |
New Mexico | 2.8% | 2.9% | 5.7% |
New York | 2.7% | 2.4% | 5.1% |
North Carolina | 2.9% | 2.6% | 5.5% |
North Dakota | 3.0% | 3.0% | 6.0% |
Ohio | 3.0% | 2.9% | 5.9% |
Oklahoma | 2.9% | 3.0% | 5.9% |
Oregon | 2.6% | 2.5% | 5.1% |
Pennsylvania | 2.8% | 2.8% | 5.6% |
Rhode Island | 2.6% | 2.6% | 5.2% |
South Carolina | 2.9% | 2.9% | 5.8% |
South Dakota | 2.5% | 2.5% | 5.0% |
Tennessee | 2.8% | 2.8% | 5.6% |
Texas | 2.8% | 2.9% | 5.7% |
Utah | 2.6% | 2.6% | 5.2% |
Vermont | 3.0% | 3.0% | 6.0% |
Virginia | 2.5% | 2.6% | 5.1% |
Washington | 2.6% | 2.6% | 5.2% |
West Virginia | 2.9% | 2.6% | 5.5% |
Wisconsin | 3.2% | 2.5% | 5.7% |
Wyoming | 2.9% | 2.6% | 5.5% |
Washington DC | 2.8% | 2.5% | 5.3% |
Data on commission rates comes from a survey of over 900 agents conducted by our partner site, Clever Real Estate.
How to save on realtor commission
There are three main ways you could pay less than 3% commission on your home sale: work with a discount real estate brokerage, negotiate a lower rate with your agent, or sell for sale by owner (FSBO).
Hire a low commission realtor | Negotiate with your agent | FSBO
Hire a low commission realtor
The easiest way to save on real estate agent fees is to sell with a low commission real estate brokerage.
The top discount brands offer the same general services as a traditional agent but charge lower rates, allowing you to save thousands without compromising on service quality.
When shopping for a low commission agent, be aware that not all companies provide the same level of hands-on service. Although the top brands match the experience of working with a conventional brokerage, some brands offset their low rates with suboptimal service and hidden fees.
It’s crucial to be selective when choosing a company to manage your home sale. We recommend you shop around and find the best combination of agent quality, local expertise, service, and pricing for your unique situation.
Top nationwide discount real estate brands
Listing Fee
Our take
Overview
Locations
Clever Real Estate is the best option for most sellers looking to save on realtor commissions. Its 1.5% listing fee is among the lowest of any full-service, nationwide brand. You’ll save thousands on commission and still get matched with top local realtors from well-known brokerages, like RE/MAX and Keller Williams. Plus, it’s free to try, and there’s no obligation to sign with an agent.
Pros
- You get a 1.5% listing fee (half the typical rate) without sacrificing service.
- You get matched with several local agents with strong sales records and great customer reviews.
- Clever’s service is free, and you have no obligation to sign with any realtor.
Cons
- Some add-ons, like drone photography and staging, may cost extra depending on the agent.
- You may not get matched with the specific realtor you want if they’re not in Clever’s agent network.
Clever Real Estate offers a 1.5% listing fee, half of what realtors traditionally charge. But you’ll still get a top local real estate agent, so you’ll save thousands without sacrificing quality.
How it works: After filling out an online questionnaire, Clever matches you with realtors in your area. You can choose to work with one of the agents, request more agent matches, or walk away with zero obligations.
Why we like it: Clever is the perfect balance of savings and quality: You get all the services and support of a traditional agent, but you pay a fraction of the typical price. By comparing agents, you ensure you’re getting the realtor who’s right for you.
Clever is available nationwide.
Listing Fee
Our take
Overview
Locations
Ideal Agent does a good job of vetting its agents, and it offers decent savings for sellers. But it has a limited service area and a small agent network, which limits your ability to choose the best agent for your situation. Alternative services, like Clever, offer the same service — but with better savings, more coverage, and more agents.
Pros
- You’ll get matched with a top-performing realtor.
- The 2% listing fee gives you a slight discount.
Cons
- Fewer agents makes it harder to compare your options.
- Coverage is limited outside of big cities.
- Savings are mediocre compared to other brands.
Ideal Agent matches sellers and buyers with traditional agents. The company negotiates 2% listing fees with its realtors and screens them for quality and experience.
A 2% listing fee is decent, but you could save more with the 1.5% that Clever and Redfin offer.
Ideal Agent’s partner realtors are good, but there aren’t very many of them, and they’re mostly located in big cities. There’s no guarantee Ideal Agent will have a realtor in your area, and if they do, you’ll get matched with only one.
Ideal Agent is available nationwide.
Listing Fee
Our take
Overview
Locations
Redfin is a well-known discount brokerage that operates in most major cities. The savings are impressive, especially if you buy and sell with Redfin, but some of its agents are inexperienced. And while Redfin’s tech-focused approach comes with some neat features, it also means you’ll get less hands-on support than you may need.
Pros
- You’ll get good savings with a 1.5% listing fee.
- Redfin’s extras, like 3D walkthroughs, can help sell your home.
- If you buy and sell with Redfin, you can get a 0.5% listing fee refund.
Cons
- Agent quality and customer service are not always great.
- Minimum fees are high in some markets.
- You’ll receive less one-on-one support from your agent.
Redfin offers good commission savings, and it’s available in most metro areas. But it comes up short in terms of customer service, plus its high minimum fees negate the savings in some markets.
Redfin uses a team-based model instead of having your agent oversee every part of your sale. This approach makes the process more efficient, which allows Redfin agents to handle a higher volume of customers. But you may face misunderstandings or mix-ups when working with multiple people.
And while some Redfin agents are good, others are new and inexperienced. With relatively few realtors in its network, you run a higher risk of getting stuck with a less-than-stellar realtor when you sell with Redfin.
Redfin is available in AZ, CA, CO, DC, FL, HI, IL, IN, LA, MA, MD, MI, MN, MS, NC, NJ, NM, NV, NY, OH, OK, OR, PA, TN, TX, VA, and WA.
Negotiate with your agent yourself
Everything in a real estate transaction is negotiable — and that includes your listing agent’s commission.
It doesn’t hurt to ask if your agent is open to working for a lower commission rate. But just because you ask for a discount doesn’t mean you’ll get one.
You’ll increase your chances of scoring a lower commission rate in a hot seller’s market, with a particularly attractive home, or if you’re willing to do some of the heavy lifting to make your agent’s job easier.
» MORE: Learn more about how to negotiate real estate commission
Sell your house without a realtor
One way to considerably lower real estate agent commission is to sell your home without an agent. However, this approach will require a significant investment of your time and energy.
In a FSBO sale, you assume responsibility for everything your listing agent would’ve done — from staging to marketing to showing to negotiating to closing. That’s a lot of work if you don’t have experience in the real estate industry!
And, if you make any mistakes along the way, you could run into issues.
For example, price your home too low, and you’ll leave money on the table. Price it too high, and you’ll drive away buyers.
With FSBO, you’ll also need to comply with all local legal requirements. Not making the right disclosures could lead to legal issues in the future.
» MORE: Learn more about how to sell a FSBO listing
Are 3% commission realtors worth it?
Most home sellers should hire an experienced, full-service real estate agent. This gives you the best chance of finding a buyer quickly and selling your home for top dollar.
In the past, that meant working with a 3% commission realtor. But these days, you can find top-rated real estate agents who charge a lot less than the industry standard.
That could mean selling with a low commission company like Clever Real Estate or negotiating a discounted rate with an agent yourself. The bottom line is that there are more ways than ever to save thousands on real estate agent fees.
It’s a good idea to shop around and compare your options to pick the best agent for your needs and budget. Consider factors such as service quality and experience along with rates when choosing an agent.
FAQ about 3% commission real estate agents
Can I pay less than 3% commission?
Yes, you can pay less than 3% commission to the seller's agent! There are a number of real estate agents that charge low commission rates to list your house, like Clever Real Estate, Ideal Agent, and Redfin. If your goal is to pay less than 3% in total commissions, you'll need to eliminate one agent from the sale, which usually means selling FSBO and offering a buyer's agent commission lower than 3%.
Is a 3% real estate commission fair?
Real estate agent commissions are negotiable, so a fair rate is whatever you and your agent are comfortable with. Competition in the real estate industry is driving down commission rates, so it's easier to find listing agents offering full service for a 2% commission instead of the conventional 3% rates. Check out our guide to the top low commission companies.
Do real estate agents always make 3%?
No, they don’t. A 3% commission is the standard for listing agents, but in some places, realtors may make closer to 2.5%. The standard commission for buyer’s agents is also 3%, and you'll usually want to offer this full amount. Reach out to a real estate professional to find the competitive rate in your area.
What is the lowest commission a realtor will take?
The lowest commission most full-service realtors will accept is a 1% listing fee. This is a significant discount compared to average real estate agent commissions, which are usually around 2.5–3%.
The best way to pay a lower commission while still receiving full service and support from a licensed agent is to work with a low commission real estate brokerage. Top brands, like Clever Real Estate, offer listing fees as low as 1.5%, and allow you to work with the best local agents from brokerages like RE/MAX and Century 21 for a fraction of the price.
What is the most common commission for a realtor?
Most realtors charge a total commission of 5–6% of the final sale price of your home. This amount is split between the listing agent (who represents the seller) and the buyer's agent — so each agent receives around 2.5–3%. Learn more about 3% commission realtors in this guide.
Related links
Interested in learning more about real estate commission rates and how to save on your home sale? Check out our other resources on low commission realtors, negotiating real estate fees, and more!
These Companies Offer the Lowest Real Estate Commission Fees: It can be tough to figure out which companies offer you the best deals on real estate commission fees. Read our in-depth reviews of the best low cost realtors!
Discount Agents and Real Estate Brokers — Are They Legit or a Scam? Are discount agents and rock bottom rates too good to be true, or the real deal? In this piece, we sort through the hype, and uncover the truth.
How to Negotiate Your Real Estate Fees — and Save Thousands: Negotiating your real estate fees against a professional negotiator can be challenging, unless you’re a lawyer or a professional poker player. This guide gives you some tips to even the playing field.
How to Find a Real Estate Agent: Separating the wheat from the chaff isn’t always easy. This piece outlines the main ways to locate a great realtor near you.
Taylor Hansen says
I like how you mentioned that sellers pay less on commission with a discount brokerage. My wife and I are wanting to sell our home this year and I’m wondering what kind of broker to work with. We might have to choose a low commission broker to get the most out of negotiations.