Negotiating Realtor Fees in 7 Easy Steps

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  Written by Trent Seigfried

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  Edited by Josiah Wilmoth

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  Reviewed by Steve Nicastro

Tips for negotiating realtor fees | Alternatives to negotiating | How agents split commissions | FAQ

Negotiating realtor fees can be similar to calling your service providers to lower your bills. Just as you might successfully reduce your cable or cell phone rates or even negotiate your rent, a little persistence and negotiation can also lead to considerable savings in real estate commissions.

Not all real estate agents are created equal, and their fees aren’t set in stone. Picture this: on a $400,000 home sale, slicing the commission from 3% to 1.5% could keep a cool $6,000 in your pocket. That’s worth an all-expenses-paid vacation or a fancy home upgrade!

But here’s the trick: negotiating can be difficult, and some agents won’t budget on their rates.

Don’t sweat it. We’ve already done the negotiating for you. Fill out this form to match with top-rated local agents — we’ve pre-negotiated lower rates so you don’t have to.

7 tips for negotiating realtor fees

Keep these tips in mind as you talk to your real estate agent about commission fees:

1. Know what factors affect commission rates
2. Shop around for the best real estate agents
3. Know your local average commission rate
4. Negotiate the buyer’s agent fee
5. Buy and sell with the same agent
6. Boost your home’s charm
7. Trim your marketing costs

1. Know what factors affect commission rates

Unlocking the secrets behind your real estate agent’s commission rates can give you an edge in your home-selling journey. Let’s dive into the factors that shape these rates. 

Market temperature

Your agent might be more open to trimming their commission in a sizzling hot market. Why? Because homes sell like hotcakes, needing less effort and time from the agent. They’re busy with multiple sales, so a little savings for you doesn’t dent their wallet.

Season

In most areas, winter is a slow time for home listings, and summer is the busiest. 

Picture the real estate world as a bustling marketplace. In winter, it’s like a quiet marketplace with fewer buyers. But come summer, it’s a festival! Agents might lower their fees in the chilly months to attract more business, making it the perfect time for you to strike a deal.

Property value

Negotiating a realtor commission gets easier when your home is high-priced. Let’s break it down: a smaller slice of a $1 million pie (say, 1%) is still a pretty sweet deal compared to a bigger slice (2-3%) of a $200,000 pie. And here’s the twist: both the million-dollar mansion and the cozy cottage could need the same amount of time and effort from your agent.

Remember that the actual dollar amount represented by 1% or 2% can be significant when negotiating your agent’s rate. While percentages are important, their final dollar figure could mean a substantial amount in real estate transactions.

2. Shop around for the best real estate agent

The world of real estate agents, brokerages, and discount real estate brokerages is vast – think of it as a sea of opportunities. You don’t have to settle for the first option or a cost that doesn’t fit your budget.

Take the time to delve into research. Discover what different real estate agents and selling avenues are available in your area. Meeting with at least two to three agents before deciding is wise. This way, you can compare and contrast to find someone who really resonates with your selling goals.

Consider using an agent matching service. Such services connect you with several full-service real estate agents open to working at more competitive rates. It’s like having a shortcut to finding the right professional fit for your specific needs.

» Find a full-service realtor near you

3. Know your local average commission rate

You’ll want real estate data on local real estate agent commission rates to effectively negotiate with agents.

Nationwide, realtors charge 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. 

For example, the average real estate commission in Wisconsin is 5.15% of the home sale, for a typical fee of $14,770. In California, the realtor commission is quite a bit lower — 5.11% — but the total fee is much higher — ​​​​$38,123— because of higher home values.

By understanding the standard commission rates in your area, you gain insight into the range within which agents are likely to negotiate on a real estate transaction. This knowledge is key to your toolkit when discussing rates with potential agents.

» Find the average commission rates in your state

4. Negotiate the buyer’s agent fee

Historically, when selling a home, the seller would pay the commission for both their own agent and the buyer’s agent. However, recent changes have shifted this responsibility.

Why does this matter? With the new rules, buyers and their agents now negotiate the buyer’s agent fee directly, allowing for more flexibility and transparency.

While sellers no longer need to offer a buyer’s agent fee upfront, they may still consider offering seller concessions. Many MLSs are introducing a field for concessions, typically expressed as a percentage. If the negotiated buyer’s agent fee is lower than the concession, the buyer keeps the difference, offering potential savings.

5. Use the same agent for multiple transactions

Consider using the same agent to sell your current home and purchase your next one. This approach can be mutually beneficial and help you negotiate real estate commission in your favor.

For you, it means working with a professional who already understands your preferences and needs. For the agent, it eliminates the need to seek out another client while also offering them the opportunity to earn commission from two transactions – selling your existing home and assisting in your new purchase.

Since your agent benefits from this dual arrangement, they may be more inclined to negotiate with you. For instance, they might agree to reduce their listing fee by 0.5%, from 2.5% to 2%. It’s a win-win situation where your agent gets the advantage of two commissions, and you enjoy a reduced rate on the sale of your home.

6. Make improvements to increase your home value

A listing agent might be more open to reducing their commission if you enhance your home’s appeal to buyers. 

This doesn’t necessarily mean undertaking major renovations like replacing the roof or HVAC system. Simple improvements like a fresh coat of paint, fixing small imperfections, sprucing up the garden, or deep cleaning carpets can make a significant difference.

Your agent may already have a list of suggested improvements. If not, and you’re concerned about potential issues that could deter buyers or affect the sale, consider getting a pre-inspection. This will help identify any critical areas that need attention, potentially making your home more marketable and aiding in negotiating a lower commission.

» The most important repairs to make before selling 

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.

Alternatives to realtor commission 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.

1. Use a discount real estate broker
2. Take advantage of agent matching services
3. Sell for sale by owner (FSBO)
4. Use a flat fee MLS company
5. Sell to an iBuyer
6. Sell to a “we buy houses for cash” company

1. Use a discount real estate broker

Discount brokers have in-house agent teams that offer many of the same services as traditional agents, but at a significantly lower price. They typically operate with in-house agent teams who can assist you throughout the selling process.

However, because discount real estate brokers often rely on handling a larger volume of clients per agent to offset their lower fees, you may notice differences in the level of personalized service. 

Do your homework before committing. Check out reviews and, if possible, speak with agents or past customers in your local market who have worked with the broker. This will help ensure the broker meets your needs and expectations when selling your home.

2. Take advantage of agent matching services

You can find a real estate agent through an agent matching service that negotiates discounted rates on your behalf.

The best agent matching services are free and only work with highly rated, full-service agents.

Real Estate Witch matches you with top-rated local agents from major brands and regional brokerages. The agents agree to offer 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)

Going the ‘for sale by owner‘ (FSBO) route means taking charge of the sale process without a real estate agent’s assistance. The main attraction? Significant cost savings. By handling it yourself, you eliminate the need to pay a listing agent’s commission, which averages 2.83% nationwide. 

Plus, if you find a buyer who isn’t working with an agent, you can save on the buyer’s agent fee, too, further boosting your financial gain.

However, it’s crucial to consider the challenges of FSBO. Selling a home involves a complex and time-intensive set of tasks, all of which will fall on your shoulders. 

Without in-depth knowledge of your local real estate market, you may also find it difficult to secure the best price and terms or to effectively reach potential buyers. That’s why a recent NAR study found that FSBO sellers earn close to $100,000 less than agent-assisted sales. ⁴SourceNational Association of Realtors, 'Quick Real Estate Statistics, 2023'

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.

Using a flat fee MLS listing service, you can have your property listed on your local MLS – a crucial resource buyer’s agents use to find homes for their clients. These services charge a low, upfront fee and are generally much more affordable than typical real estate commissions.

However, 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.

5. Sell to an iBuyer

iBuyers are companies that leverage technology to make fast, all-cash home offers that are often seen 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 cash home buyer

A company that buys houses for cash (also known as a ‘We Buy Houses’ company) 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. Conversely, these companies and investors have to make low offers to ensure a decent profit. They typically pay 40% to 50% below a home’s market value in exchange for a quick and convenient sale.

How real estate commission fees are split

Regarding realtor fees, the total amount doesn’t all go directly to your listing agent. Instead, it’s divided among several parties. Here’s a detailed look at how this works:

• Division of commission. Typically, the commission is split between your listing agent and the buyer’s agent. 
• Setting the buyer’s agent fee. As the seller, you also have the power to decide what commission rate to offer the buyer’s agent. This is an important strategic decision, as offering a competitive rate can attract more buyer agents and, by extension, potential buyers for your home.
• Average commission rates. On average, real estate commissions are about 5.49% of the property’s final sale price. Most cases, the commission is divided equally between the buying and selling agents. But the agents rarely get 100% of their commission due to brokerage fees and other related expenses.  
• Brokerage share. If the agents are affiliated with a real estate brokerage, their managing broker will likely take some of their commissions. Often, this could mean that the broker takes 25% to 50% or more of the agent’s share.

Example of realtor fee split

Imagine a home is sold for $500,000, with a total commission set at 6%. Here’s how that commission would typically be divided:

• If the commission is split equally between the listing and buyer’s agents, each agent would receive 3% of the sale price. In this case, 3% of $500,000 is $15,000 for each agent.
• Assuming each agent then splits their commission with their brokerage; they would each give half of their earnings to their respective brokerages. 
• Therefore, the agent and the brokerage would each receive 1.5% of the sale price, which amounts to $7,500.

So, the distribution of the total commission would be as follows:

• Listing agent: 1.5% ($7,500)
• Listing brokerage: 1.5% ($7,500)
• Buyer’s agent: 1.5% ($7,500)
• Buyer’s brokerage: 1.5% ($7,500)

Realtor fees calculator

Use this calculator to see what your selling agent’s commission might look like based on your terms.

FAQ

Related articles

How Much Do Real Estate Agent Commissions Cost? Learn what the average real estate agent fee is by state or nationwide.

The Best Discount Real Estate Brokers: Discount brokers offer many of the services of a full-service brokerage with fewer fees. Which discount real estate broker is right for you?

What Companies Offer the Lowest Real Estate Commission Fees? These companies offer great rates without any negotiating.

Top 2% Real Estate Commission Companies: Getting a 2% real estate commission can save you thousands of dollars on your home sale! Read about the top 2 percent commission realtors here.

Sources

1. National Association of Realtors. “What the NAR Settlement Means for Home Buyers and Sellers.” ↩︎