How much is the average realtor commission?
Real estate commissions are one of the biggest expenses when selling a home, with the average home seller spending 5.37% of the home’s sale price on realtor fees. Based on the median home value in the U.S., that’s about $17,950.
If that sounds daunting to you as a seller, don’t worry — realtor fees aren’t set in stone and can be negotiated if you know what you’re doing. There are also real estate companies that offer reduced commission models. Either of these options could save you thousands, or even tens of thousands, of dollars!
For example, with an agent matching service like Clever Real Estate, you’d only pay a pre-negotiated listing rate of 1.5%. Compared to the national listing rate average of 2.72%, you could save $5,749 on a $334,269 house.
What is the average listing agent commission?
Listing agents’ fees range from 2.26% to 3.17%, with an average of 2.72%. That equates to about $7,554 to $10,596 on a $334,269 home (which is the national median).
The listing agent commission is the amount paid to the agent representing the seller. It’s paid for by the proceeds from the home sale.
What is the average buyer’s agent commission?
Buyer’s agent commission rates typically range from 2.19% to 3.17%, or 2.65% on average. That’s about $7,320 to $10,596 on a $334,269 home.
The buyer’s agent commission is the amount paid to the agent representing the home buyer during a sale. This is paid from the home sale proceeds, which means the cost affects the seller’s bottom line and isn’t paid directly by the buyer.
Average realtor commission by state
The average commission rate for realtors can vary considerably based on where you live. In higher-fee states like Wisconsin, the average total commission is around 5.67%, whereas in California, it is 4.91%.
Find your state below to get a better idea about average commission rates near you:
|State||Avg. seller's agent commission||Avg buyer's agent commission||Avg. total commission|
Is the average realtor commission in your state more than you expected? If so, one way you can pay less is by using an agent matching service like Clever. Clever hand picks top local agents from around the country, who provide a full-service selling experience for a pre-negotiated commission rate of just 1.5% — which could save you thousands of dollars on the sale of your home!
Who pays realtor fees?
The seller pays for all of the realtor fees — even the buyer’s agent commission. These fees are paid when the sale is finalized, meaning they come from the sale proceeds and not out of pocket.
So why does the seller pay the fees for the buyer’s agent? Essentially, the buyer’s agent fee is a financial incentive for agents to bring the seller qualified buyers. If they do so successfully and the house sells, the agent receives the commission as their compensation.
Since the buyer pays for the house before the realtor fees are deducted, they actually pay this fee indirectly — the fees are just baked into the price.
🚨 Beware of dual agency
In certain circumstances, an agent may represent both the buyer and seller — this is called a dual agent. Though technically allowed in many states, this situation is a bit of a gray area in terms of sales ethics. The agent is supposed to have their client’s best interest in mind, but it’s difficult to do that when representing both sides of a deal.
However, if you’re comfortable with dual agency in your situation, consider asking for a discount (since the agent gets the entire commission) and getting a second opinion to ensure you’re getting the best deal you can.
Why are realtor fees so expensive?
It’s natural to wonder what you’re getting for the large cost of realtor commissions, but these fees compensate agents for a wide range of services, including:
- Upfront marketing costs like photography or staging advice
- Time spent showing the property
- Ensuring crucial steps of the transaction are completed correctly and on time
- Writing up and submitting offers
On average, realtors only complete around 12 transactions per yearand actually don’t take home as much as it seems for the many services they provide.
Agents are paid solely on commission and don’t receive a salary, so they need this commission to pay for a lot of their business expenses.
That said, there are ways to get lower rates from a realtor, especially if you can reduce the time and money they put into a home sale. For example, agents don’t need to pay for advertising with repeat clients, so they might get a lower rate.
Factors that influence commission rates
Despite being the biggest expense in selling a house, realtor fees have actually been decreasing for years, going below 5.5% in the last few years. Of course, that average varies from state to state.
Clever Real Estate recently conducted a survey of realtors around the country to determine how they set their rates and why they may accept lower, or insist on higher, commissions. This research shows that there are three top ways to negotiate a lower commission:
- Be a repeat client
- Be in an area where housing inventory is low
- Sell a home with a higher property value
In particular, being a repeat client is your best chance at negotiating a lower rate because having recurring business is more important to agents than getting one slightly larger check.
Areas with low inventory mean agents have fewer current listings and chances to make money. It also means homes are probably selling quickly and require less time and effort from the agent. In this situation, sellers can shop around, get different rates from different agents, and see who’s willing to give them the lowest rate.
Also, realtors are more willing to accept lower commissions for higher-value homes. This is largely because the work required for more expensive homes isn’t significantly more than cheaper homes, but the commission checks can be much bigger. So sellers should consider asking for a discounted rate if they have a luxury home to sell.
On the other hand, there are a handful of reasons an agent may want a higher fee. The biggest reason for this is if the seller wants more expensive marketing or photography, so be wary of extra costs if you need these services for your house.
How to save big on realtor fees
There are a handful of ways you can save money on real estate commissions:
- Try negotiating a discount yourself — Legally, realtor commission rates are always negotiable. If you’re a repeat customer or selling in a hot market, maybe you’ll be successful in negotiating those fees down. That said, many realtors don’t like working for less money if they don’t have to, so don’t expect this to be easy.
- Sell your home for sale by owner (FSBO) — This is a common tactic for sellers trying to save money. You can effectively eliminate the seller’s agent fee completely by taking care of the sale yourself. However, this requires you to do all the work you would have paid your agent to do. Also, research shows that FSBO sellers tend to get significantly less for their homes than agent-sold homes.
- Work with a low commission broker — This is the strategy we recommend for saving on commissions while still getting great service. For example, Clever offers a pre-negotiated listing fee of just 1.5% while providing a full service experience through their network of top local agents.
The data from the Clever Real Estate research is based on a 2022 survey of over 600 agents who were asked to indicate typical commission rates for both buyer’s and seller’s agents in their area.
The data is purely an indication of what rates are common, on average, and do not suggest that the rates are fixed. Readers should use this information to inform themselves as to rates in their area.
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 5.37%, 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 working with a discount broker to get reliable service for a significantly lower rate.
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.
Want to learn more about how to save money buying or selling a home? Check out these articles to learn more:
The Best Discount Real Estate Brokers for Every Budget: Discount brokers can help connect you with an agent for a lower rate. Read this to find out how.
Learn more about 1% commission realtors: Check out our 2022 rankings for the best 1% realtors and brokerages.