Florida is one of the hottest markets in the nation right now, so if you’re selling a property in the Sunshine State, your chances are good for a fast, easy, and lucrative sale. However, every seller needs to account for the closing costs they’ll incur when they sell.
When you’re figuring out how much you stand to make from selling your house, don’t forget to account for the Florida real estate commission, which averages around 6% of the home’s sale price. 6% might sound like an inconsequential amount, but it amounts to thousands, or tens of thousands, or dollars right off the top, depending on how much your home sells for.
But there’s good news, too. Everything in a home sale is negotiable— including the commission rate. We’ll go over some tried-and-true strategies to reduce your commission below, but first, let’s look at the average commission in Florida, and exactly how it’s calculated and distributed.
Average Florida Real Estate Commission
As of April 2020, the median home value in Florida is $249,943, according to Zillow. We surveyed agents across the country, and found the average real estate commission cost to be 5.45%, so calculating the average Florida commission fee would look something like this:
$250,000 x 0.0545 = $13,525
The average Florida commission, then, is around $13,500. That’s a significant amount of money for anyone. So who pays it, and how can you get it reduced?
Who Pays Real Estate Commission in Florida?
Bad news, sellers: in Florida, sellers typically pay the real estate commission. That 6% commission is split among the listing agent, the buyer’s agent, the listing agent’s brokerage, and the buyer’s agent’s brokerage. That means the seller is essentially paying everyone involved in the transaction.
You can also look at it another way. Since the seller is paying the commission out of the proceeds from the sale, you could argue that they’re paying the commission with the buyer’s money. After all it’s widely acknowledged, in the industry, that the buyer’s agent’s commission is baked into the price of the home. In that sense, the seller was never going to pocket the money they end up paying in commission— rather, if there weren’t agents involved, the home price would simply be lower.
How to Calculate Your Commission Rate
Calculating your commission rate is going to depend on how you sell your home. Generally, there are four different ways to sell: a conventional agent-assisted sale, a discount agent-assisted sale, a FSBO seller to an agent-assisted buyer, and an FSBO seller to a buyer with no agent. Each of these types of sale has a slightly different commission rate.
If you go through with a conventional agent-assisted sale, you’re likely going to pay the typical 6% commission. As we showed above, that’ll come to $15,000 for the Florida median home value of $250,000. If your home sells for more than that, you’ll pay more; if it sells for less, you pay less. Half of that commission goes to the listing agent, and their brokerage, and the other half goes to the buyer’s agent, and their brokerage.
If you sell with a discount agent, you’ll pay less than the 6% commission. Companies like Clever Real Estate connect sellers with top local agents who provide a full service selling experience for a flat fee of $3,000, if your home sells for less than $350,000, or 1% if it sells for more than that.
This option can save sellers thousands compared to a conventional sale. If you go the discount agent route, you’ll probably still have to pay the buyer’s agent a 3% commission, but instead of paying your listing agent 3%, you just pay a flat fee. Using the Clever Real Estate price model on the average Florida commission of $15,000, you’d pay $7,500 to the buyer’s agent, and $3,000 to your discount agent— meaning you saved $4,500. Considering that discount agents usually offer the exact same services as conventional agents, this is a great option for sellers looking to save.
Now let’s say you sell without an agent, i.e. in an FSBO sale. One of the most common misconceptions about selling FSBO is that you won’t have to pay any commission. That can be true under certain specific circumstances, but in the vast majority of cases, an FSBO seller will still be on the hook for some commission.
That’s because, as we discussed above, the commission is split among the seller’s agent, and the buyer’s agent. So even if you, as an FSBO seller, forego working with an agent, you’ll still have to pay 3% to the buyer’s agent.
That means that most FSBO sellers aren’t going to pay zero commission— they’re just getting a 50% discount.
Now, there are cases when an FSBO seller can potentially pay zero commission. If you sell to a buyer who isn’t working with an agent, you won’t have to pay a cent in commission. But this situation is relatively rare, for reasons that become clear when you consider how much marketing and screening an agent does. It’s possible that a qualified, interested buyer could see your “For Sale” yard sign, and make you an offer, but the odds are low. Even if you don’t work with a listing agent, you’ll likely need a buyer’s agent to find your home and tell their client about it.
So using the Florida median home value of $250,000, the four tiers of commission look like this:
Conventional agent-assisted sale: $250,000 x 6% = $15,000
Discount agent-assisted sale: $250,000 x 3% (buyer’s commission) = $7,500 + $3,000 discount agent fee = $10,500
FSBO sale (buyer is using an agent): $250,000 x 3% = $7,500
FSBO sale (unagented buyer): $250,000 x 0% = $0
When sellers decide to go FSBO, they’re aiming for that last 0% bracket. But there are some significant downsides to selling FSBO. First, according to NAR, there’s a big price disparity between agent-assisted sales and FSBO sales. Agent-assisted homes sold for an average of $250,000, while FSBO sales sold for only $190,000.
To put that in perspective, if you sold a $250,000 home, and paid the 6% commission, you’d net $235,000. If you sold FSBO for $190,000, and paid only half as much commission, you’d net $182,500.
What accounts for this price gap? Well, agents do a ton of work on pricing strategy and marketing, both of which have a huge impact on the final sale price. Marketing is important because the more people who know about your home, the more competition there will be, thus driving up the price. And the pricing strategy is important for similarly competitive reasons; you want to strike a balance between pricing it reasonably enough that people aren’t turned off by it, and pricing it enticingly enough that multiple buyers show interest. That kind of subtle price calibration depends on a grasp of the local market— a sensibility that can be hard to come by for a FSBO seller.
Clearly, the ideal is to be able to tap into an agent’s market sense and experience, but do it at a lower price point than the 6% commission— something, perhaps, like a discount real estate agent.
How You Can Reduce Your Real Estate Commission Rate
There are a lot of ways to reduce the amount of real estate commission you pay on your home sale that don’t necessarily require you to set out on your own as an FSBO seller. Let’s look at a few of them.
Raise Your Home’s Value
Your agent can help identify cost-effective ways to increase the value of your home— things like new paint, landscaping, staging, and updating kitchens and bathrooms can bring your home’s price tag way up, which increases both the commisson, and your net. An agent’s practiced eye will be able to home in on exactly what areas of your home could benefit from upgrades, and what features have the most appeal to local buyers right now.
Think of it this way: 6% of $250,000 is $15,000, meaning you’ll net $235,000. But if you update and freshen up your home so its value goes up to $325,000, 6% comes to $19,500, and your net is now $305,500. Working closely with your agent to absolutely maximize your home’s value means they’ll make more commission, and you’ll net more money. It’s the definition of a win-win!
Work with a Flat Fee Agent
In the past several years, flat fee agents have become more and more common. These agents sell a home for a flat fee instead of a percentage-based commission, so they represent huge potential savings for sellers.
Companies like Clever Real Estate connect sellers with top local agents who offer a full service sale experience for only $3,000, if your home sells for less than $350,000, or 1% if it sells for more than that. While you’ll still be responsible for paying the buyer’s agent, the commission you pay your own agent will be radically reduced.
How can they offer the same services for so much less money? Well, many of these agents are seasoned professionals who are able to quickly and easily sell a home for maximum value— so they make up in volume what they lose out on in per-sale commission. Once again— a win-win for the seller!
Ask the Buyer to Pay Their Agent
Everything in a home sale is up for negotiation, and in a hot market like Florida, the seller has a lot of leverage. You can ask the buyer to pay their agent’s commission— the worst that can happen is they’ll say no. And if they already have their heart set on your home, there’s a good chance they’ll say yes.
In a seller’s market like Florida, the seller wields a lot of power. If your home is likely to attract immediate interest, and sell for above ask, you certainly have the leverage to ask your agent to work for a reduced commission. After all, if your hot home doesn’t require a lot of marketing, or weeks of showings, your agent won’t have to spend as much time on it as they would on the average home. And shouldn’t less work equal less commission?
Another scenario in which you have a good chance of negotiating a lower commission is if you don’t need the standard suite of agent services. For example, if your home doesn’t need staging, or you’re a lawyer who doesn’t need guidance through negotiating and closing, you can make a sound argument for a lower commission. Remember— it doesn’t cost you anything to ask, so you might as well try!
Florida Real Estate Commission Rates Today
The strange truth about commission is this: there are no hard and fast rules about what a commission has to be. Everything in a home sale really is negotiable, and rates can vary between different agents and brokers. But tradition holds that the commission is 6%, split between the seller’s agent and the buyer’s agent.
Still, the fact that about 8% of home sales are FSBO sales, along with industry variance, brings the average commission down a bit. When you average all home sales, the 2019 real estate commission rate in Florida was right at 5.7%. Pay more, and you could probably have done better. Pay less, and congratulations— you got yourself a great deal.