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Edited by Josiah Wilmoth
Written by Steve Nicastro
Edited by Josiah Wilmoth
The traditional 3% real estate commission model, where home sellers pay 3% to both the listing agent and the buyer’s agent (totaling 6%), has long been the norm.
However, commission rates have steadily declined and average 5.32% nationwide in 2024. Of that, 2.74% goes to the seller’s agent and 2.58% to the buyer’s agent.
With the recent NAR settlement allowing for more commission negotiations, along with low housing inventory and increased agent competition, the traditional 3% commission is becoming less common. This article discusses how the 3% model works and explores ways to reduce your commission fees.
At Real Estate Witch, we offer a simple solution you should consider first: We negotiate on behalf of home sellers like yourself to secure the services of top-rated local realtors for just a 1.5% listing fee. Start here to request matches with local agents in your area, with no obligation.
» JUMP TO: How 3% commission works | Buyer’s agent fee | Calculator | How to save
How the 3% commission model works
In a typical home sale, the seller is responsible for paying a commission to each agent involved in the transaction. This standard arrangement usually includes two agents:
- The listing agent earns a 2-3% listing fee for their services in marketing and selling your home.
- The buyer’s agent receives a 2-3% buyer’s agent fee for bringing the buyer to purchase your home.
Home sellers rarely pay realtor fees out of pocket. Instead, real estate agents typically don’t get paid until you close on a home sale or purchase, and these fees are deducted from the sale proceeds during the closing process.
3% realtor commission example ($300,000 house)
| Agent | Fee | Cost |
|---|---|---|
| Listing agent | 3% | $9,000 |
| Buyer's agent | 3% | $9,000 |
| Total commission | 6% | $18,000 |
🚨 Changes to realtor’s commission structure are here
The National Association of Realtors (NAR) and some big real estate companies were in hot water because of a lawsuit from November 2023. The plaintiffs argued that this arrangement was unfair and artificially inflated costs for home sellers.
They’ve decided to settle, with NAR agreeing to pay $418 million over four years without admitting wrongdoing.1 A few other key changes have resulted from this settlement:
- Buyers now negotiate agent commissions. Buyers negotiate their agent’s commission directly and must sign a buyer’s agency agreement before touring homes. Sellers no longer automatically cover these fees.
- No buyer’s agent commission in MLS listings. Sellers can no longer set or display buyer’s agent commissions in MLS listings, shifting the responsibility for negotiation to buyers and their agents.
- Potential seller concessions. Sellers may offer concessions to cover some or all of the buyer’s agent fees, which could resemble the current system but offer more negotiation flexibility.
This settlement changes how real estate commissions are handled, giving buyers more control in negotiating fees. Keep your eyes peeled for updates!
Can I pay a 3% total commission rate?
Yes, it’s possible to achieve a total real estate commission fee of 3% when selling your house. However, this approach may have implications for the timeline of your sale and the final sale price.
Here are some potential ways to pay a 3% total commission.
Reduce both agent’s commission
With the recent NAR settlement, buyers are now responsible for negotiating and paying their agent’s commission, so sellers are no longer 100% required to offer commission or cover the buyer’s agent fees.
However, our research shows that in many markets across the country, sellers still cover part of the buyer’s agent commission or provide concessions to cover the cost. This fee remains completely negotiable, so you can try to negotiate a lower fee with the buyer to reduce your costs.
You can also still focus on reducing the commission for your listing agent to cut costs. One way to reduce expenses is by working with a discount real estate broker who offers services at a rate below the typical listing fee — for example, 1.5% instead of the standard 2.74%. These services often pre-negotiate reduced rates with experienced agents, saving you the hassle of negotiating while providing full support throughout the selling process.
Eliminate one agent from the sale
In dual agency, the real estate agent represents both the buyer and the seller, so the commission is paid to only one agent instead of two.
Another approach is to sell your house without a realtor. This avoids a listing fee but still requires a standard buyer’s agent commission.
However, both strategies come with significant risks for most home sellers.
- Dual agency creates a conflict of interest for your agent as they must represent you and the buyer equally, potentially affecting their ability to advocate for your best interests during negotiations.
- Recent studies have shown that sellers often achieve a lower sale price when selling without an agent than when working with one. FSBO homes sold at a median of $310,000 last year, significantly lower than the median of agent-assisted homes at $405,000.2
» MORE: Better strategies to save on realtor commission
3% buyer’s agent fee: Why sellers have paid it
The fee compensates the buyer’s agent for their valuable role in helping you find a suitable buyer. Buyer’s agents play a crucial part in the real estate transaction by assisting buyers in their home search.
Traditionally, the typical buyer’s agent fee ranges from 2-3% of the home’s sale price, and averages 2.58% nationwide.
However, this rate can vary based on market conditions and your location. Also, with the recent NAR changes, buyers must now negotiate the rate with their agent directly, before viewing homes. This means sellers no longer set the buyer’s agent commission in the listing agreement, and may not be on the hook to cover the fee.
Why do realtors make a 3% commission?
A 3% realtor commission has been a long-standing industry norm, primarily because real estate agents operate on a payment model that only receives compensation upon successful home sale or purchase closing.
This means that agents invest a significant amount of their time, effort, and often their own money in serving their clients, all without the guarantee of payment.
- For example, listing agents often bear the upfront costs of essential services like professional photography, MLS listing fees, and marketing efforts to promote your home.
- Buyer’s agents may spend days or weeks assisting buyers in their search for homes, submitting offers, and negotiating. In cases where a home doesn’t sell, or a buyer changes their mind, the agent doesn’t receive any compensation for their efforts.
Over time, the real estate industry settled on a 3% commission rate as a fair compensation structure that adequately rewards agents for the time, dedication, and risks of real estate transactions.
However, opinions on this matter vary widely. For example, one survey found that about 55% of sellers say they shouldn’t have to pay the buyer’s agent fee. Commission rates have seen noticeable declines in recent years, although they remain significantly higher than other countries.3
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.
How to save on realtor commission
You have three options to pay less than the standard 3% commission on your home sale: Work with a discount real estate brokerage, negotiate a lower rate with your agent, or sell your home to a cash buyer.
Hire a low commission realtor | Negotiate with your agent | Cash buyer
Option 1. Hire a low commission realtor
The simplest way to reduce real estate agent fees is by selling your home through a low commission real estate brokerage. Leading discount brands offer similar services as traditional agents but at lower rates, allowing you to save thousands while still receiving quality service.
However, not all low commission companies provide the same hands-on service. While some maintain the same experience as working with a traditional brokerage, others may compensate for their lower rates with subpar service and hidden fees.
Compare different options to identify the ideal balance of agent quality, local knowledge, service, and pricing that aligns with your needs.
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 save thousands on commission while working with a top local realtor from a well-known brokerage, like RE/MAX and Keller Williams. Clever has more agents (19,000+) in more markets than most other low-commission options, plus the highest customer rating among brands we evaluated.
Read the full Clever Real Estate review.
Pros
- 1.5% listing fee is half the typical rate.
- Agents have strong sales records and great customer reviews.
- Free agent-finding platform with no obligation to sign with a realtor.
Cons
- Add-ons like drone photography and staging may cost extra.
- May not get matched with a specific realtor if they’re not in Clever’s 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
Like Clever, Ideal Agent is an agent matching service. It connects you with a full-service realtor at a discounted listing fee of 2%. Ideal Agent claims it only works with the top 1% of realtors by performance, based on sales volume in each agent’s market. However, customers looking for multiple choices may be disappointed. It’s a “take-it or leave-it” situation when it comes to the agent you’re matched with, as the company denied our shoppers’ request for another agent match.
Pros
- Full-service support from a top-rated agent
- Realtors must meet strict quality standards
- Nationwide coverage
Cons
- 2% listing fee higher than competitors
- You get only one agent match
Ideal Agent is an agent matching service that pre-negotiates 2% listing fees with vetted, conventional realtors across the country. The company is very selective about the real estate agents it works with. However, its agent network is also smaller than its competitors, and it provides only one agent match. Not being able to compare multiple agents is a big risk to consider, as the agent might not be the right fit for your situation.
Ideal Agent is available nationwide.
Listing Fee
Our take
Overview
Locations
Redfin is an established discount brokerage that offers impressive savings — especially if you buy and sell with the brokerage. But some of its agents are inexperienced. And while Redfin’s tech-focused approach comes with some neat features, it also means you may get less hands-on support than you need.
Pros
- 1.5% listing fee provides good savings.
- Up to 0.25% in savings for buyers
- Significant savings if you buy and sell with Redfin.
Cons
- Agent quality and customer service are not always great.
- High minimum fees in some markets.
- Agents may not have expertise in your local market.
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 major markets in Washington D.C. and the following states: Arizona, Arkansas, California, Colorado, Florida, Hawaii, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia.
Option 2: Negotiate with your agent directly
In real estate transactions, almost everything is open to negotiation, including negotiating the commission rate of your listing agent.
While it’s worth asking your agent if they’re open to a lower commission, there’s no guarantee they’ll agree. Your chances of securing a reduced commission may be higher in a hot seller’s market, with an exceptionally attractive property that’s likely to sell fast, or if you’re willing to assist with some of the workload to make your agent’s job easier.
Option 3. Sell to a company that buys houses for cash
You can eliminate both agents by selling directly to a cash home buyer.
This approach offers various advantages, including faster closings, reduced selling costs, flexible terms, and no need for repairs or showings. Cash offers also have a lower risk of falling through due to financing issues.
However, some drawbacks exist, such as a potentially lower sale price, lack of agent representation, and limited room for negotiation. It’s essential to carefully weigh these pros and cons before deciding whether to sell to a cash buyer.
» Compare fair cash offers from local and national investors
What about FSBO?
Selling your home without a realtor is another option to try to save on commissions, but it comes with challenges. It requires a deep understanding of the selling process and in-depth knowledge of your local real estate market.
Additionally, selling FSBO may not necessarily result in cost savings. Recent data indicates that sellers who work with an agent achieve an average sale price of nearly $100,000 more than those who opt for FSBO, potentially negating any commission savings.
FAQ
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 reduce your total commission payment to less than 3%, it becomes more challenging. This typically involves eliminating one agent from the sale process, which can be achieved by either selling FSBO (For Sale By Owner) and offering a buyer's agent a commission lower than 3%, or by selling directly to a cash home buyer, although it may result in a lower sale price.
Is a 3% real estate commission fair?
Real estate agent commissions are negotiable, and a fair rate is determined by your comfort level and agreement with your agent. On a national scale, average rates for listing agents are now below 3%. Due to increased competition in the real estate industry, it's becoming more common to find listing agents providing full service for commissions of 2% or even lower, as opposed to the traditional 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%. Commission rates may vary depending on the local real estate market and home values. It's generally advisable for sellers to offer a competitive commission rate to buyer's agents, as this can help attract more potential buyers. To determine the prevailing rate in your area, it's best to consult with a local real estate professional.
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
Average Real Estate Commission. Is 3% commission the norm in your area? Learn about average real estate commission rates nationwide and by state.
These Companies Offer the Lowest Real Estate Commission Fees: It can be tough to determine 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.
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.