How Much Is Real Estate Agent Commission?

Apr 29, 2021

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Real estate agents work hard on your behalf to ensure the best deal possible when you buy a home. They use years of experience and industry knowledge to find a home you will love and can afford to pay for. Instead of getting paid an hourly rate, realtors get compensated for their efforts through a commission. While some agents charge a flat fee, many base their fee on a percentage of the home's final sales price after the deal is finalized.

The agent is typically responsible for such important items as staging the home, producing professional-looking photos and/or video, gathering and filing all necessary documents, as well as listing and marketing the property, and negotiating a deal on your behalf. Whether working for the seller or the buyer, real estate agents put in long hours to strike the best deal possible for their client. They play a vital role in the execution of a home sale and should be well-compensated for their efforts.

What is a Real Estate Commission?

Commission percentages for realtors can vary depending on the sale and the parties involved. The commission is typically between 5 percent and 6 percent of the home's final price but can vary based on the state and the current status of the local housing market. When fewer listings are available in a particular area, the average commission for local realtors will usually drop.

The realtor will often work for weeks or months to secure the sales and does not get their commission until you find the home you want, the financing is secured, the seller agrees to the terms, and the documents are signed at closing. If the sale fails to go through, all the agent's preparation work will be for nothing.

What Services Do Commission Costs Cover?

The overriding job of a real estate agent is to facilitate the sale of a home as quickly as possible with their clients' best interests in mind. Real estate commissions typically pay for a wide range of standard services throughout the home-selling process.

Agents make it their responsibility to manage all aspects of the sale, from marketing the property to negotiating the best deal possible for their client. They present the home to potential buyers and facilitate all needed inspections and appraisals and preside over the execution of the closing.

Regardless of the percentage or flat-fee that serves as the realtor’s commission, there are likely to be additional fees for a variety of services your agent will perform throughout the process. Examples of additional realty fees may include:

  • Home inspections
  • Photography and videography production costs
  • Staging expenses
  • Closing costs such as appraisals, title fees, insurance, and taxes

Who Pays the Commission From a Real Estate Sale?

The real estate commission for both the listing and buyer’s agent is the responsibility of the seller. However, the seller will often add at least a portion of the commission to the price of the home to pass off the commission onto the buyer. The fee is typically split between agents evenly but can vary depending on the agents' experience and reputation. The commission for real estate agents is usually due at the time of closing.

What is a Dual Agent?

If a realtor is representing both the buyer and the seller, they may have trouble keeping priorities in line for both clients, but they do get to keep both commissions. Most realtors will not act as a “dual agent,” and many states have laws prohibiting the practice. For those agents able to legally handle the inherent conflict of interest, being a dual agent will double their commission on the sale.

Can You Negotiate a Realtor’s Commission?

There are no rules or regulations that mandate how much commission a real estate agent earns on residential home sales. Industry standards can vary from state to state and can depend on individual realtors and brokers. The seller may request a reduction in the realtor’s commission, but the agent is under no obligation to honor the request.

While no law or regulation prohibits it, asking for a reduction in your agent’s commission is a risky ask. The money you saved will likely be offset by other services, such as the marketing of your property. Lowering the commission may result in less exposure of the home to those most likely to be interested in purchasing it. If you are looking for ways to save money, you could offer a transactional agreement with the realtor. This reduces the commission in return for a formal reduction in services.

What is Flat-Fee Real Estate?

Some real estate listing agents work on a flat fee of a few hundred dollars. A flat-fee realtor will save in fees typically based on a percentage of the home's total cost. Agents that work off of a flat fee typically provide limited or streamlined representation.

You want to be able to depend on a real estate agent to perform a vital role in the process. A flat-fee or discount realtor is more likely to skimp on the necessary services that give you the best chance at a successful sale.

Contact SimpleShowing For Your Realty Needs

When you are preparing to purchase a home, you look for ways to save money and make the sale more affordable. At SimpleShowing, we offer commission fees well below the industry average of 5% to 6%. Listing fees at SimpleShowing are lowered to just 1%, and you get the same exceptional service and features of a big brokerage firm. For complete information and to get started, contact us and speak to a qualified associate today.

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