Content of the material
- How much do real estate agents make per sale?
- Real estate agents’ earnings vary by state
- Commissions When the Sale Doesnt Close
- How the real estate agent commission is set
- Commissions can be negotiated
- Published by
- Andrew Te
- Do Real Estate Agents Get Paid Weekly?
- What is a fair real estate commission?
- Avoid Dual Agency Even With a Commission Reduction
- Are Realtors overpaid?
- Average real estate commissions by state
- How much are real estate commissions?
- Why do realtors get 6% commission?
- How can I find agents who charge lower commission rates?
- What do real estate agents and Realtors do?
- Dual Agency
- Who Pays Closing Costs?
- Do Realtors Get Paid by the Buyer?
- FAQs on Real Estate Commissions
- 1. How do Real Estate agents get paid?
- 2. How much do real estate agents make?
- 3. What commission percentage do most Realtors charge?
- 4. What is the commission split in real estate sales?
- 5. How do I ask a Realtor to lower their commission?
- 6. Are commissions on real estate negotiable?
- 7. What other fees do I have besides a real estate commission when selling my home?
- 8. What does a 70/30 commission split mean?
How much do real estate agents make per sale?
Listing agents charge sellers an average commission of 5–6% of their home’s sale price. However, that amount is generally split with the buyer’s agent.
- Listing agents earn an average commission of 2.8% per sale
- Buyer’s agents earn an average commission of 2.7% per sale
Agents don’t get to keep all of their commission from a sale, though — each gives a portion to the broker they work under.
Assuming an even split between agents and brokers, here’s how a typical commission breaks down:
At the end of the day, most agents walk away with about 1.5% per sale. On a home priced at $200,000, that equates to $3,000. However, on higher priced homes, agents stand to pocket much more.
|Home sale price||Total commission (6%)||Agent’s earnings (1.5%)|
Real estate agents’ earnings vary by state
Agents generally earn more in large cities or densely populated states.
For example, real estate agents in New York make $102,200 per year, on average. Agents in South Dakota, by comparison, make $45,550 per year.
The table below breaks down average commissions and take-home earnings by state.
|State||Average total commission (%)||Average total commission ($)||Average agent take home pay ($)|
*Dollar values are rounded to the nearest hundred.
Commissions When the Sale Doesnt Close
Commissions are generally paid only when a transaction settles. There are instances, however, when a seller is technically liable for the broker's commission even if the sale doesn't close—and often the terms specifying this requirement are in the listing agreement. This situation is rare, but it could happen. For example, if the broker has an offer from a buyer who is ready and able to make the purchase, but the seller does any of the following:
- Changes their mind and refuses to sell
- Has a spouse who refuses to sign the deed (if that spouse signed the listing agreement)
- Has a title with uncorrected defects
- Commits fraud related to the transaction
- Cannot deliver possession to the buyer within a reasonable time
- Insists on terms not listed in the listing agreement
- Mutually agrees to cancel the transaction with the buyer
Listing agreements vary and each is individually negotiated. They may include contingencies that require a seller to pay the commission even if the home doesn’t sell.
How the real estate agent commission is set
Realtor Kevin Deselms says the commission percentage is based on several factors. This can include local real estate market conditions.
“But the amount is often based on negotiation between the seller and the listing agent or the agent’s brokerage,” he says.
In other words, the commission is negotiable. And some agents are willing to give discounts, either within the listing agreement or later.
In fact, about three out of five sellers get a discount on their agent’s commission.
“Commission rates have been trending down in recent years,” says real estate broker Matt Buttner.
“This is mostly because of the internet and technology,” he says. “The MLS now automatically syndicates the listing out to real estate websites like Zillow and Realtor.com. So a listing agent’s job is easier.”
Discounts are given for many reasons.
“Say, for example, a client is selling one house and buying another using the same agent. In this case, the agent is more likely to offer a discount,” says real estate attorney and Realtor Bruce Ailion.
“Or say the property is in a hot market and competitively priced,” Ailion says. “It might take less work to sell. That could lead to a discount.”
Commissions can be negotiated
Most people don’t realize they are allowed to negotiate commission with their real estate agent.
On average, U.S. home sellers spend $19,019 (the equivalent of 5.37% on a typically priced home) on realtor commissions — making them one of the biggest expenses you’ll pay when selling a home.
However, commission rates aren’t standardized across the industry. They range from a low of 4.45% to a high of 6.34%, depending on the market.
While commissions are generally established by an agent’s broker, some realtors have the freedom to set their own rate.
If you’re comfortable starting the conversation, your agent might be willing to give you a discount. Or, you can skip the negotiations and work with an agent offering lower rates right off the bat.
Our friends at Clever have pre-negotiated commission with partner agents across the county, so you’ll only have to pay 1% or $3,000 to your listing agent when you sell your home!
Andrew has 7+ years of experience in Real Estate and working with Real Estate Agents. He is passionate about the housing market and solving problems. View all posts by Andrew Te
Do Real Estate Agents Get Paid Weekly?
Most real estate agents do not get paid weekly or even biweekly. Instead, they work without pay in anticipation of earning commissions on the sales they make. These commissions are are paid at closing and split between the brokers and the agents.
What is a fair real estate commission?
A commission rate between 5%-6% is standard for most markets to hire a full service real estate agent. This rate should mean you have an agent who is dedicated to selling your home for the best possible price, who is available and communicative, and who is willing to shepherd the transaction from start to finish. If an agent isn’t willing to offer all or the majority of services listed above, you should interview more candidates.
Avoid Dual Agency Even With a Commission Reduction
There is something in real estate called “dual agency” that you want to ensure you are not getting dragged into without your knowledge. Dual agency means that the agent works for the seller and the buyer.
Working for both parties is impossible if you think about it – not if you are committed to getting the best result for the client.
While some states have made dual agency illegal, other states still allow it or allow it as long as it is disclosed to the clients. Whether it is revealed or not, you are better off with an agent committed to your best interests.
Many agents will fool a seller into accepting dual agency by offering them a carrot of reducing the commission.
Sellers should understand that their agent DOES NOT have to become a dual agent – a circumstance in which the agent will no longer be representing them. They can remain as a seller’s agent and still give the seller a commission discount.
Avoid dual agency arrangements; as a rule, they do nothing for a seller. Dual agency is illegal in eight states, including Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, and Vermont.
Don’t be suckered into this awful arrangement. A commission for a real estate agent is often the driving force for poor business decisions.
Are Realtors overpaid?
Though home sellers may feel that Realtor fees of up to 6 percent are too high, Duffy argues that they’re not high enough. After all, a lot goes into listing a home, such as:
- Performing a comparative market analysis to establish a competitive price
- Arranging for photo shoots, sometimes including aerial shots via drone
- Writing descriptive listing copy to attract interest from other Realtors and potential buyers
- Providing staging guidance
- Showing the property multiple times to prospective buyers
- Hosting open houses on weekends
- Providing yard signage
- Making sure listings are populated on all major property search websites
- Helping the seller review and negotiate buyer offers
When an offer comes in, the listing agent negotiates on behalf of the seller, often presenting one or more counteroffers. And with the volatility of the current market and record low levels of inventory, Realtors frequently deal with multiple potential buyers to help you get the most out of your property.
Average real estate commissions by state
Overall, the national average Realtor commission in 2021 was 5.5 percent, according to data from Clever. In most states, the commission ranged between 5 and 6 percent. But in states like California and New Hampshire, where expensive properties abound, the commission was typically under 5 percent. Find the average commission in your state in the table below:
|State||Average commission rate|
How much are real estate commissions?
Real estate commission rates aren’t set by any federal or state laws. Realtor commissions or realtor fees are usually calculated as a percentage of the home’s purchase price and are often 5% to 6%.
If the real estate commission on a house is 6%, the listing agent won’t collect all of it.
Instead, the listing agent and buyer’s agent will split the money. Each of them will likely take 3%.
Why do realtors get 6% commission?
Traditionally, you'll pay 6% commission in exchange for your listing agent selling your home and the buyer's agent securing a buyer. The full commission is split between the listing agent, the buyer's agent, and both agents' brokers. However, commission rates vary regionally and by agent.Learn more about average commission costs near you.
How can I find agents who charge lower commission rates?
Today, a growing number of real estate companies can help home sellers save on commission. Instead of paying the typical 6% commission, you can pay as little as 4% commission to sell your home. On a $350,000 home, this could save you up to $7,000 in realtor fees! Ready to save? Find the best low commission real estate brokers near you!
What do real estate agents and Realtors do?
Whether acting on behalf of sellers or buyers, the duty of a real estate professional is to maximize the benefits his or her client gets from the home transaction.
Agents do this by having:
- An intimate knowledge of the local housing market, including expertise in appraisal
- Negotiating skills to secure the best or optimum price for the client
- Local contacts in the marketplace who can help with the rapid acquisition or sale of a home
- A close knowledge of the legal and mortgage processes involved
- Troubleshooting skills that keep a transaction on track when issues arise
- Interpersonal skills that allow clients to feel comfortable and in control throughout the process
If you pick a good one, your agent can be highly valuable.
Ideally, your agent will have several years of experience in your local real estate market. But new agents can offer a lot of skills and insights, too.
Agents on both sides of a deal have a fiduciary responsibility to their clients. This means agents must disclose known issues about a property and negotiate in good faith. As such, a buyer’s agent must act in the best interests of their customers just as a seller’s agent must represent the best interests of their clients. There may be a time when a listing agent also represents a buyer (for the same property), and this is known as dual agency.
Because dual agency makes it difficult to negotiate and represent both parties of a real estate deal, several states prohibit the practice. The State of California allows dual agency, but only if the agent or broker fully discloses it to the buyer and seller. To say the least, this becomes a precarious situation.
Who Pays Closing Costs?
At the end of the day, the seller is responsible for the closing costs. This is why most sellers incorporate the closing costs into the final price of the home.After that, the seller will guarantee that they can pay the closing costs of their home.
Since closing costs are a part of the contract between seller and buyer, there is room to negotiate terms. However, in some cases, the buyer may agree to pay certain parts of the closing costs.
While excluding closing costs from the cost of the home keeps the price of your home low, it is a risk. This strategy has been applied by sellers who want to keep the price of their homes as low as possible.
As a seller, be careful that you negotiate a deal that helps you pay the closing costs comfortably.
Do Realtors Get Paid by the Buyer?
In one way, yes, but technically no.
The seller pays the closing costs for a home. As a result, the realtor’s fees are then incorporated into the cost of the home.
In most cases, buyers do not need to pay directly for the agent who represents them. Buyers will only pay for the home. After that, the seller pays the closing fees and commission on the purchase of the home.
The home sale commission is split 50/50 between a buyer’s agent and a listing agent. In some cases, an agent may receive more from the commission than the other agent, but this is rare.
FAQs on Real Estate Commissions
The following are some of the most asked questions about Realtor’s fees.
1. How do Real Estate agents get paid?
As you have learned, real estate agents get paid by receiving a commission based on the sales price. Real Estate agents do not get paid hourly.
2. How much do real estate agents make?
A real estate agent’s income will depend on how many sales they make in a given year, along with the total of their expenses.
3. What commission percentage do most Realtors charge?
The most common real estate commission across the country is 6 percent of the sales price. Realtor commissions are calculated by multiplying the sales price by the agreed-upon commission percentage. In most parts of the country, a fair commission is somewhere between 5 and 6 percent of the home’s sales price.
4. What is the commission split in real estate sales?
The most common commission split on real estate is by far 50/50. If you deviate from that, it will be looked upon very unfavorably in many places.
5. How do I ask a Realtor to lower their commission?
One of the best ways to get agent fees lowered is when you will be buying and selling simultaneously. If you ask the agent to discount their commission if buying and selling with you, they will often agree to a commission reduction.
Frankly, if an agent disagrees, you would be better off hiring someone else.
6. Are commissions on real estate negotiable?
Yes. Real Estate commission rates are negotiable. Some agents, however, may not budge from what they charge for a fee. The Realtor commission rate can vary from agent to agent and company to company. It is a good idea to interview multiple real estate agents.
7. What other fees do I have besides a real estate commission when selling my home?
You can see all of the closing costs for a seller in this home selling expenses guide.
8. What does a 70/30 commission split mean?
Commissions on real estate are split between a real estate agent and the company’s owner. The agent gets 70 percent of the total commission in this scenario, and the real estate broker gets 30 percent.
The commissions split between agents and brokers will vary from company to company.