Published
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Written by
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Edited by Kristen Klempert
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Reviewed by Steve Nicastro
Written by Steve Nicastro
Edited by Kristen Klempert
Reviewed by Steve Nicastro
Average commission | Average commission rates by state | How realtor fees work | NAR lawsuit update | How much agents make | How to save on realtor fees | Methodology
Selling a home involves some big costs, and realtor commissions are usually the biggest. On average, sellers pay about 5.49% of the home’s sale price on realtor fees, 2.83% going to the seller’s agent and 2.66% going to the buyer’s agent.
Let’s break it down: If your home sells for the median U.S. price of around $431,000, the total realtor commission would be about $23,666. This is split between the listing agent (about $12,191) and the buyer’s agent (about $11,475).
But remember, you can often negotiate these fees. As a seller, you’ve got some power here. If you know the market and your options, you might save quite a bit.
And here’s more good news: Some smart real estate companies offer lower commission models. This means you keep more money from your home sale.
For example, with an agent matching service, you’d only pay a pre-negotiated listing rate of 1.5%. That’s way less than the national average of 2.83%, so this could mean big savings for you! Real Estate Witch can match you up with top local agents and get you a 1.5% listing fee deal.
Average real estate agent commission rates
| Agent | Average rate |
| Seller’s agent | 2.83% |
| Buyer’s agent | 2.66% |
Average listing agent commission
Realtor fees pay for lots of different services. For listing agents, this includes marketing your home, showing it to buyers, handling important parts of the sale, and dealing with offers.
Listing agents’ fees range from 1.00% to 4.00%, with an average of 2.83%. That equates to about $3,460 to $13,842 on a $346,048 home. The proceeds from the home sale pay for the commission.
Average buyer’s agent commission
Buyer’s agent commission rates typically range from 1.00% to 4.00%, or 2.66% on average. That’s about $3,460 to $13,842 on a $346,048 home.
The buyer’s agent commission, paid from the home sale proceeds, is the amount given to the agent representing the buyer. The seller typically covers this cost and isn’t a direct expense for the buyer.
Average commission based on final sale price
A realtor’s commission is determined by their commission rate and the home’s final sale price. Interestingly, a realtor charging a 2% commission could earn more than one charging 3% if they sell a more expensive home.
Here’s a table comparing potential listing agent commissions at a 2% rate versus the average rate of 2.83% for a listing agent.
| Sale Price | Commission at 2% | Commission at 2.83% |
| $350,000 | $7,000 | $9,905 |
| $500,000 | $10,000 | $14,150 |
| $750,000 | $15,000 | $21,225 |
| $1 million | $20,000 | $28,300 |
Average real estate commission by state
Realtor commission rates differ widely based on your location and the typical housing prices in your state.
For example, in states such as Ohio, where housing prices are generally lower than the national average, the commission rates tend to be higher, around 5.99%. Conversely, in states like California, where housing prices are higher, the average commission rate is slightly lower at 5.11%.
Do you know what the average realtor commission rate is in your state? Take a look at the table below to get a better understanding of the rates specific to your area:
| State | Avg. total commission |
|---|---|
| Alabama | 5.5% |
| Alaska | 6.0% |
| Arizona | 5.8% |
| Arkansas | 5.7% |
| California | 5.4% |
| Colorado | 5.4% |
| Connecticut | 5.4% |
| Delaware | 5.7% |
| Florida | 5.7% |
| Georgia | 5.7% |
| Hawaii | 5.4% |
| Idaho | 5.4% |
| Illinois | 5.5% |
| Indiana | 5.5% |
| Iowa | 5.5% |
| Kansas | 5.5% |
| Kentucky | 5.7% |
| Louisiana | 5.7% |
| Maine | 5.4% |
| Maryland | 5.7% |
| Massachusetts | 5.4% |
| Michigan | 5.5% |
| Minnesota | 5.5% |
| Mississippi | 5.7% |
| Missouri | 5.5% |
| Montana | 5.4% |
| Nebraska | 5.5% |
| Nevada | 5.4% |
| New Hampshire | 5.4% |
| New Jersey | 5.4% |
| New Mexico | 5.8% |
| New York | 5.4% |
| North Carolina | 5.7% |
| North Dakota | 5.5% |
| Ohio | 5.5% |
| Oklahoma | 5.8% |
| Oregon | 5.4% |
| Pennsylvania | 5.4% |
| Rhode Island | 5.4% |
| South Carolina | 5.7% |
| South Dakota | 5.5% |
| Tennessee | 5.7% |
| Texas | 5.8% |
| Utah | 5.4% |
| Vermont | 5.4% |
| Virginia | 5.7% |
| Washington | 5.4% |
| West Virginia | 5.7% |
| Wisconsin | 5.5% |
| Wyoming | 5.4% |
| Washington DC | 5.5% |
Surprised by the average commission in your area? Don’t worry, there’s a savvy way to keep more money in your pocket.
Real Estate Witch selects the cream of the crop in local agents nationwide, offering you a top-notch, full-service selling experience. The best part? A low commission rate of just 1.5%. This smart move could save thousands of dollars when you sell your home!
How realtor fees work
Who pays realtor fees?
The seller typically pays all the realtor fees in today’s housing market. This includes not only their own agent’s commission but also the commission of the buyer’s agent.
These costs are taken care of at the end of the sale, using the money from the sale itself, so the seller doesn’t have to pay anything upfront.
Why does the seller pay the buyer’s agent fees?
The seller paying the buyer’s agent’s commission encourages the agent to bring in serious, interested buyers. This commission motivates the buyer’s agent to find the right buyer for the home.
Once the sale goes through successfully, the agent receives their commission as a reward for their successful matchmaking.
🧙♀️ Real estate commission changes are here!
Some big news is shaking up how we think about selling and buying houses. When you sell a home, you usually have to pay the people who help sell it (listing agent) and those who help buy it (buyer’s agents). Well, something happened that might change all that.
The National Association of Realtors (NAR) and some big real estate companies were in hot water because of a lawsuit from November 2023.1 The lawsuit said it wasn’t fair for sellers to set the buyer’s agent fees and list the fee on the MLS.
The lawsuit was settled in August 2024. It means a few things:
- Listing agents can’t advertise buyer’s agent fees. This change shifts the responsibility to buyers and their agents to negotiate fees directly – rather than the seller dictating the buyer’s agent’s compensation.
- Seller concessions may resemble the current system. Many MLSs are introducing a field for seller concessions, often expressed as a percentage. If the buyer’s agent fee is lower than the concession, the buyer keeps the difference, potentially saving money.
- Buyer’s agency agreements are mandatory. Buyer’s agents must secure a signed agreement outlining services and fees before taking on clients or touring homes, which provides more transparency for buyers.
- Settlement payments for impacted sellers. NAR will pay $418 million to past sellers over approximately four years. Eligible sellers may qualify for settlement payments.
» Want to learn more? Check out the NAR’s big agreement
Why are realtor fees so expensive?
When you’re paying realtor commissions, you’re covering a variety of services that agents provide. For listing agents, these services include:
- Costs for marketing your property, like professional photography and staging advice.
- Time and effort spent in showing your property to potential buyers.
- Managing and completing essential steps of the transaction efficiently and on time.
- Drafting and submitting offers on your behalf.
How much do realtors actually earn?
Realtors typically earn their income through commissions rather than a fixed salary. This commission-based structure is vital for them to cover various business expenses.
The income of real estate agents might not be as high as many assume. Here’s a breakdown to give you a clearer picture:
- Annual transactions: On average, realtors complete about 12 transactions per year.
- Average commissions: Listing agents earn an average commission of $11,723 per sale, but that doesn’t factor in brokerage splits (money paid to their broker), which can be 50% of the total commission.
- Additional expenses: Agents also incur costs like real estate licensing fees ranging from $600 to over $1,000, varying by state.
- Annual income: In 2022, the average annual income for real estate agents was approximately $65,850, according to the U.S. Bureau of Labor Statistics. This figure is notably lower compared to other professions, such as loan officers who typically earn around $84,160, nurse practitioners with an average income of $124,680, and marketing and sales managers who earn about $153,470.
- Low net income: A deeper dive into the earnings reveals a more nuanced picture. According to a study by the National Association of Realtors (NAR), the median net income for all sales agents was only around $25,000 after accounting for all expenses.
- New agents struggle. The financial picture can be even more challenging for agents with two years or less of experience. They often earn a median gross income of just $9,600.
However, there’s still room for negotiation on commission rates. For example, an agent might not have to spend as much on advertising your property if you’re a repeat client. This reduced expenditure can often lead to a lower commission rate for you, making the selling process potentially more cost-effective.
Factors that influence commission rates
Realtor fees are a significant part of the cost of selling a house, and these rates can vary from state to state.
Clever Real Estate surveyed realtors nationwide to find out how they decide on their commission rates and when they might be willing to change them. The survey identified three main strategies for getting a lower commission:
1. Being a repeat client. If you’ve worked with an agent before, you’re more likely to get a better deal. Agents value ongoing business relationships and may offer lower rates for repeat clients rather than chasing a slightly higher one-time commission.
2. Selling in low inventory areas. Agents have fewer chances to make money in places with few houses for sale. Homes in these areas also tend to sell quickly and with less effort. This situation allows sellers to shop around and possibly get lower commission rates from agents eager for listings.
3. Selling higher-valued homes. Agents might be open to reducing their commission for luxury or expensive homes. The reasoning is that the commission from selling a high-value property can be substantial, even at a lower rate, and the effort involved isn’t much more than for less expensive homes.
So, if you’re selling a high-end property, it’s a good idea to negotiate for a lower commission.
On the other hand, sometimes agents might ask for a higher commission rate. This can happen if you, as the seller, want extra advertising or special photos of your house. These additional features cost the agent more, so they might charge you a bit extra to cover their costs.
How to save big on realtor fees
You’ve got several options to save on real estate commissions:
Choose a low-commission brokerage
A low commission real estate company is our top recommendation for cutting costs without compromising on service quality. For instance, Clever offers a reduced listing fee of just 1.5% and still provides full service with experienced local agents.
Negotiate a discounted rate
You can always try to talk down the commission rates with your realtor. This works best if you’re selling again with the same agent or your area’s housing market is hot. But remember, agents prefer not to drop their fees unless necessary, so negotiating on your own may be a bit challenging.
» LEARN: How to negotiate realtor fees
Sell your home yourself (FSBO)
Going the FSBO route is a popular way to save. You skip the seller’s agent fee by handling the sale alone. But be prepared to do all the work an agent would normally handle. Also, several studies suggest FSBO homes often sell for less than those sold through agents.
» MORE: How to sell your house for sale by owner
Methodology
The data from the Clever Real Estate research is based on a 2023 survey of over 600 agents who were asked to indicate typical commission rates for both buyer’s and seller’s agents in their area.
We’ve adopted a comprehensive methodology to give our readers the most accurate and helpful information on average real estate commissions. Our approach includes:
Analyzing regional differences. Since real estate markets vary by location, our data reflects these differences in commission rates across states and local areas, giving readers relevant information for their specific region.
Emphasis on clear, useful information. Our goal is to make complex real estate information easy to understand. We simplify our research findings into clear, actionable insights for home buyers and sellers.
Consulting with real estate experts. To enhance the reliability of our data, we consulted with real estate professionals, including current and former real estate agents and brokers. Their expertise helps validate our research and provides additional insights for home sellers and buyers.
FAQs about average realtor commissions
What is a fair commission for a real estate agent?
A fair commission depends on the quality of your home, the services your agent provides, how quickly you want to sell, and if you are a repeat customer. Rates also differ somewhat between states. That said, nationally the average commission rate is 5.49%, but ranges from 4.45% to 6.34% depending on the state.
How do I save money on real estate agent fees?
Real estate agent fees are negotiable, but most agents are reluctant to accept lower fees without good reason. Being a repeat customer or selling an expensive home in a hot market might motivate agents to accept a lower fee, but we recommend a discount broker to get reliable service for a significantly lower rate. Learn how to save on realtor commissions.
Who pays for real estate commissions?
Usually, the seller pays for both of the agent commissions after the sale has been finalized. These fees are deducted from the sale price, so neither the seller nor the buyer have to pay out of pocket for these commissions.
What percentage do most realtors charge?
Real estate commission is typically between 5-6% of the home's final sale price, split between the listing agent and buyer's agent. Clever Real Estate's survey of realtors found that sellers pay an average of 5.49% of their home's sale price in realtor fees, with listing agents earning slightly more (2.83%), then buyer's agents (2.66%). Learn more about how much commission a realtor makes in a typical home sale.
Sources
- The New York Times. “Home Sellers Win $1.8 Billion After Jury Finds Conspiracy Among Realtors.” ↩︎
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