What Is The Real Estate Commission In Texas?
Sep 21, 2020
If you’re thinking about buying or selling a home in the state of Texas, then you probably know that there are several different costs involved.
For example, if you're thinking about buying a home in Texas, then you'll need to consider the down payment, earnest money deposit, monthly mortgage payments, and closing costs.
If you’re selling in Texas, then you might want to invest in some home improvements, house cleaning or landscaping to help improve your home's appeal.
In either case whether you are selling or buying, you'll want to be aware of one of the potentially largest costs involved: the real estate commission in Texas.
How Real Estate Agents Make Money In Texas
According to the National Association of Realtors, 89% of sellers in the US used a real estate agent to help them sell their homes last year.
The vast majority of those real estate agents charged their clients the same way, too – on commission.
Just how much those clients were charged depends on the real estate agent themselves or their brokerage. Some realtors may charge more as a reflection of their experience level, the high-end market they work in, or because they specialize in serving a very specific clientele.
For the most part, though, the average real estate commission in Texas is around 6% of the home’s price. So, if a home sells for $300,000, and the agents charge 6%, then they would collect $18,000 at closing.
Again, some experienced real estate agents may be able to justify charging anywhere from 6-7% or more for their services.
In fact, SimpleShowing offers a 1% listing fee which saves you $7,500 on average when you sell your home. You'll work with an experienced, local real estate agent and get all the same services you'd expect – such as professional photography, MLS listing, help with negotiation, paperwork management and contract support.
SimpleShowing is currently in the Atlanta, Orlando, Tampa, Fort Lauderdale and Dallas markets. To get started, request a free home valuation.
Real Estate Agents Don't Get 100% of the Commission
In the example above, the agents may collect $18,000 at closing, but they’re not actually keeping all of it.
First, if the buyer used a different agent, the commission is split between both the listing agent and the buyer's agent. Using the earlier example, if the commission was split in half, the seller’s agent would keep $9,000 and the buyer's agent would get $9,000.
Second, if the agent works for a brokerage – and most do – they typically have to pay that broker for their help. Just how much they have to kick back to the broker usually depends on the brokerage and it's individual rates or fees. In some cases, those who sell more homes every year are usually allowed to keep a larger percentage of their commissions. On the other hand, newer real estate agents can sometimes have to give up 50% or more of their commission.
Some brokers charge their agents a flat fee per sale or even just a flat monthly fee. The majority charge a commission, though, which can easily range from 30-60% of what the agent made on a sale. So, although you may have to pay the agents 5% of what you sold your home for, they might have to split that with the other agent and then split the rest with their broker.
The Real Estate Commission in Texas
Now that you understand how real estate agents get paid, let’s talk about what kinds of commissions you can expect them to charge in Texas.
The average real estate commission in Texas is right around 6%.
In Texas, it pays – literally – to hire an experienced agent who can make the most of these opportunities.
Fortunately, as we mentioned earlier, you can greatly reduce your real estate commission in Texas by choosing an agent who only charges 1% to sell or looking for an agent who offers incentives when you buy, such as a Homebuyer Refund.
Who Pays a Real Estate Agent's Commission in Texas?
On occasion in some real estate transactions, one agent will work for both the buyer and the seller in Texas. Other times, the homeowner may handle the sale of their house – called "for sale by owner".
However, most of the time, sellers and buyers both have their own real estate agents in Texas. Each agent is tasked with looking out for their respective client’s best interests while also working together toward the common goal of finalizing the sale of the home.
You already know that a seller’s agent charges his or her client a commission once the home is sold.
However, many homebuyers in Texas hear this and assume that means they don’t have to pay their agent. Many agents even market themselves by explaining to potential clients that their services are free.
As it turns out, that’s not completely true.
Instead, it’s probably more accurate to say that both the buyer and the seller end up paying the real estate agents, albeit in a fairly roundabout way.
Put yourself in the shoes of the seller’s agent for a minute.
If you knew you had to split your commission with someone else before you had to then pass along another large percentage to your broker, what would you do?
Like most other agents, you’d factor that cost into your total price.
So, while technically the seller pays the real estate agent’s commission in Texas, the buyer is contributing their fair share, as well. It’s just baked into the price they’re paying for the home.
How to Keep the Real Estate Commission in Texas to a Minimum
On paper, the real estate commission in Texas can appear fairly straightforward, but you now know that there’s a lot that goes on behind the scenes.
Even though it might seem high, some agents will say they have to charge at least 6% just to make a decent living. Or do they?
At SimpleShowing, we are pioneering a new way of helping homeowners save a lot of money when they hire experienced agents to sell their homes.