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Edited by Josiah Wilmoth
Written by Trent Seigfried
Edited by Josiah Wilmoth
Tips for negotiating realtor fees | Alternatives to negotiating | How agents split commissions | FAQ
Key takeaways
- It’s legal to negotiate your listing agent’s commission.
- Negotiate using information about your specific situation and the state of the real estate market in your area.
- If you don’t feel comfortable negotiating, you can use alternative services that offer reduced fees and commissions.
Should you negotiate realtor fees?
Yes! You should negotiate real estate commission rates with your listing agent. Real estate agents don’t charge a set fee across the board, and it’s standard practice in the industry to negotiate rates.
Negotiating your agent’s commission could save you thousands of dollars. On a $400,000 home sale, negotiating the commission from 3% to 1.5% would save you $6,000.
But not all real estate agents will be willing (or able) to negotiate their rates. Many split their commission with their real estate brokerage (usually 50/50), and the brokerage may have a minimum.
Also, you should still offer a competitive buyer’s agent commission, regardless of what you negotiate with your listing agent.
If you try our tips for negotiating realtor fees and still can’t get a reduced rate, you can always try a service like Clever. Clever connects you with top local agents, and it negotiates a 1.5% listing fee with them on your behalf. You’ll still get full service — but for a fraction of the cost. Try Clever’s free service today.
8 tips for negotiating realtor fees
Keep these tips in mind as you talk to your real estate agent about commission fees:
- Know what factors affect commission rates
- Shop around for the best real estate agents
- Know your local average commission rate
- Offer the full buyer’s agent fee
- Buy and sell with the same agent
- Make improvements to increase the home value
- Reduce marketing costs
- Work with a newer agent
🚨 Know the lingo!
- Agent: The person who handles the sale, either on the seller’s or the buyer’s behalf.
- Broker or brokerage: The business an agent works for.
- Commission: Money that agents and brokerages receive after a property sells, usually calculated as a percentage of the home’s sale price.
- MLS: Multiple listing service. The site where agents list properties.
1. Know what factors affect commission rates
Several factors affect the real estate agent’s commission. Knowing these factors can give you some leverage when negotiating.
Market temperature
The hotter the local market, the more flexible your agent is likely to be on commission rates.
That’s because homes tend to sell quickly and with less effort in a hot market, when there’s high demand. In a hot market, most agents invest less time and effort into the real estate transaction. They have plenty of time to devote to earning commission on multiple sales, so a few thousand dollars of savings for you won’t hurt their bottom line.
Season
In most areas, winter is a slow time for home listings and summer is the busiest. New business is hard for listing agents to scrounge up in the off season, when there are fewer properties selling, so they might be more willing to negotiate rates to get your business.
Property value
You’ll have an easier time negotiating a realtor commission the higher your home’s value is. A small percentage of a $1 million sale, for example, might be a lot more than a larger percentage of a $200,000 sale. But both homes could take the same amount of time and effort for the agent.
Be aware of the dollar amount that 1% or 2% represents for your realtor when you negotiate their rate.
2. Shop around for the best real estate agent
You have a lot of options for agents, brokerages, and discounts services, so there’s no need to settle for a cost you’re not comfortable with.
Do some research on real estate agents and other selling options in your area. You’ll want to interview at least two to three agents to find the right fit. An agent matching service like Clever Real Estate can match you with several full-service real estate agents who work for lower rates.
3. Know your local average commission rate
To negotiate effectively with agents, you’ll want real estate data on local commission rates.
Nationwide, realtors charge about 5.45% per real estate transaction, while a typical listing fee rate is closer to 2.7% — but these numbers vary wildly from market to market and season to season.
For example, the average real estate commission in Wisconsin is 5.93% of the home sale, for a typical fee of $13,700. In California, the realtor commission is quite a bit lower — 4.92% — but the total fee is much higher — $33,600 — because of higher home values.
Know what real estate agents generally charge in your area to understand the range they’re willing to work in as you negotiate.
4. Offer the full buyer’s agent fee
Typically, the seller pays the commission for both the seller’s agent and the buyer’s agent. Offering a competitive buyer’s agent fee encourages buyer’s agents to show your home to their clients, which makes your house easier to sell and your real estate agent’s job easier. Since your listing agent’s job will likely be easier, they may be more willing to lower their rate.
5. Buy and sell with the same agent
You can use the same agent to help you sell your existing home and purchase your next home.
Being an agent for you as both a buyer and a seller saves your agent the trouble of finding a new customer, so they might be willing to negotiate real estate commission to get your repeat business.
6. Make improvements to increase the home value
A listing agent may be more willing to lower their commission if you agree to invest in projects that will make your home more attractive to buyers.
Your agent may have some projects in mind. If they don’t, you can get a pre-inspection to identify what needs to be fixed. Even small things can show that you care about selling your home, like repainting, decluttering, replacing the front door, or deep cleaning the carpets.
7. Reduce marketing costs
Agents spend a considerable amount of time — and money — marketing homes. This can include scheduling open houses, hiring professional photographers, and running social media ads.
One way to persuade an agent to lower commission is to waive certain marketing tactics. If you don’t need extras like drone photography or a 3D tour, your agent will save on up-front costs, and they can pass those savings on to you.
8. Work with a newer agent
Agents who are still establishing their careers might be more willing to negotiate real estate agent commissions. They want to build experience and earn a favorable reputation.
But be careful: you still want a high-quality real estate agent to sell your home, even if they’re relatively new. You don’t want your final sale price to suffer because your realtor isn’t skilled at negotiating with buyer’s agents.
Alternatives to negotiation
Don’t ever be afraid to negotiate real estate commissions with a real estate agent — but if your fee negotiations don’t yield the terms you want, here are some ways to save money on your home sale without them.
- Use a discount real estate broker
- Take advantage of agent matching services
- Sell for sale by owner (FSBO)
- Use a flat fee MLS company
- Sell to an iBuyer
- Sell to a “we buy houses for cash” company
1. Use a discount real estate broker
Discount real estate brokers have in-house agent teams that offer many of the same services as traditional agents, but at a significantly lower price.
Because most discount brokers make up for their lower rates by handling a higher volume of business per agent, there might be trade-offs in service quality. Before signing a contract, check reviews and talk to some agents or customers who’ve worked with the broker to make sure the company will give you the service you need.
2. Take advantage of agent matching services
You can find a real estate agent through an agent matching service, like Clever Real Estate, that negotiates discounted rates on your behalf.
The best agent matching services are free to use and only work with highly rated, full-service agents.
Clever is one of those companies. It matches you with top-rated local agents from major brands and regional brokerages. The agents agree to offer Clever customers full service for a fraction of their typical rates in exchange for the simplicity of connecting with clients. So you get the discount without sacrificing quality service.
3. Sell for sale by owner (FSBO)
Listing your home for sale by owner means you handle the entire sale without the help of a real estate agent.
The potential upside is big savings: you’ll pay zero commission to a listing agent. And if you work with an unrepresented buyer, you can also avoid the buyer’s agent fee and boost your savings even more!
Just beware of the downsides to FSBO, too. The home selling process is complex and time consuming, and all the tasks of selling the home would be on your shoulders. You likely aren’t an expert in your market, so you could struggle getting the best possible price and terms and connecting with buyers.
4. Use a flat fee MLS company
One of the biggest challenges for FSBO sellers is attracting qualified local buyers. The multiple listing service (MLS) can increase your listing’s exposure.
A flat fee MLS listing company posts your listing on your local MLS — the primary platform buyer’s agents use to find properties — for a low, up-front fee. These services are usually much cheaper than real estate commission fees.
Unlike an agent, a flat fee MLS doesn’t offer much beyond exposure. You’ll still manage the entire sale, and you’re on the hook for the flat fee whether your home sells or not.
5. Sell to an iBuyer
iBuyers are companies that leverage technology to make fast, all-cash offers on homes, often sight unseen.
These companies have strict criteria for the types of homes they buy. If your home qualifies, you’ll get an initial cash offer within approximately one business day. You can then typically choose a flexible closing timeline — anywhere from 7 to 90 days.
This isn’t usually a money-saving option, though — you pay for the convenience of a quick sale. iBuyers charge hefty service fees, ranging from 5% to 15%, and the most you’ll likely get for your home is fair market value.
6. Sell to a ‘we buy houses for cash’ company
“We buy houses for cash” companies and property flippers will typically buy any property — regardless of its condition or location — for cash.
A cash for houses company or property flipper may be a good option if you have a distressed property or need to sell quickly.
The big trade-off with cash for houses companies, however, is price. These companies and investors have to make low offers to ensure a decent profit on the flip. They typically pay 40% to 50% below a home’s market value in exchange for the quick and convenient sale.
How real estate agents split commissions
Realtor fees don’t all go to your own agent. One portion goes to your agent, and the other goes to the buyers agent.
You can only negotiate the listing agent’s fee, not the buyers agent.
Real estate commissions on average are 5.45% of the property’s final sale price. Generally, the buying and selling agents split the commission 50/50. If the agents are working with a real estate brokerage, their managing broker can take half of their commissions as well.
That leaves your listing agent only about 25% of the total commission fee open to negotiation.
Realtor fees example
Let’s look at a home that sells for $200,000 with a 6% total commission.
Say the agents split the commission evenly, each taking a 3% fee. Then each agent splits 50% of their commissions with their brokerage, so each agent would receive a total 1.5% fee, or $3,000.
The split looks like this.
| Commission fee | 6% ($12,000) |
|---|---|
| Listing agent | 1.5% ($3,000) |
| Listing brokerage | 1.5% ($3,000) |
| Buyer’s agent | 1.5% ($3,000) |
| Buyer’s brokerage | 1.5% ($3,000) |
Realtor fees calculator
Use this calculator to see what your selling agent’s commission might look like based on your terms.
FAQ
Will realtors negotiate their commission?
Yes, but not always. According to a 2018 housing survey from Zillow, about 57% of sellers who attempt to negotiate the commission with the selling agent succeed in reducing the commission. However, only 31% of sellers try to negotiate at all. Even if you are successful, you might find better savings with a discount real estate brokerage.
What if I feel uncomfortable negotiating?
You don’t have to negotiate! You can skip the negotiating and choose the best agent for you based on other factors such as experience and local success. Alternatively, you can forgo the agent and sell your home through an another method, like using a discount real estate brokerage or selling for sale by owner.
What is a fair commission rate?
In 2022, the average real estate agent commission in the U.S. was 5.45%. That number varies across markets and seasons. Most agents charge a commission around 2.7%. What an agent considers fair will depend on the value of your property, how hot the market is, how easily they can line up buyers and other factors that determine how much time and energy they’ll devote to the sale.
What is the cheapest real estate commission?
The lowest commission real estate companies charge fees around 1% to 2%, or minimum fees of $3,000 to $5,000. You’ll generally find those rates through agent matching services, which negotiate low costs on your behalf. Typical realtor fees, if you work directly with an agent or brokerage, are around 2.7%, with a nationwide average of 5.45%.
What are 80-20 and 70-30 broker commission splits?
The 80-20 and 70-30 splits typically refer to the commission split between agents and their brokerage. In these splits, agents take 80% or 70% and the brokerage receives 20% or 30%. It's usually closer to a 50/50 split between the agent and brokerage, but high-production or more experienced agents can command a higher split.
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